Israel CPI Moves to 2.6%: A Real-Return View from Ofek Kesef Asset Management

Israel’s inflation signal strengthened modestly as CPI rose to 2.6%, up from 2.4%. In isolation, that change may look incremental, but it matters because inflation is the baseline that determines whether investment outcomes translate into real purchasing power. For long-term allocators, the objective is not simply to “make returns,” but to preserve what those returns can actually buy after costs and inflation.

What makes this CPI print more interesting is the surrounding backdrop. Israel’s 10-year government yield held close to 3.78%, and USD/ILS softened toward 3.14 as the shekel strengthened. Together, these conditions point to a market environment that is not tightening aggressively. Inflation moved higher, but financing conditions remained stable. That combination tends to shift the focus away from dramatic positioning and toward the quality of portfolio structure.

Real returns depend on both sides of the equation: inflation and the discount rate. If inflation rises while long yields surge, the hurdle can increase quickly and valuation pressure tends to spread. But when inflation edges up while yields remain steady, the portfolio challenge is usually more nuanced. The risk is not a single shock; the risk is drift—small changes accumulating until the portfolio is no longer aligned with its intended risk budget.

That is why Ofek Kesef Asset Management approaches this type of tape through a repeatable framework. The emphasis is on how exposures behave across regimes rather than on guessing the next market move. A stable yield backdrop can make diversification work better, especially when currency conditions are supportive. But a firmer CPI print is still a reminder that purchasing power needs active attention, even in a calm market.

Energy is another piece of context. Brent near $63.73 and broadly flat suggests there is no fresh oil-driven acceleration in the inflation impulse at this moment. This does not mean inflation is solved; it means the pressure is not coming from a sudden commodity spike. In such periods, inflation tends to be shaped more by domestic dynamics and services components than by a single external shock. That matters for portfolio planning because it changes the probability distribution of outcomes: fewer tail surprises, more slow-moving regime shifts.

Equity sentiment, meanwhile, can remain constructive even in a higher-inflation reading if financial conditions look stable. TA-35 trading higher intraday (+0.90%) fits that idea. Yet portfolios should avoid confusing “green screens” with durable real outcomes. When inflation is firming, nominal returns can flatter performance while real progress remains limited. The result is that discipline matters more than excitement.

In practice, this environment rewards clarity. Duration exposure should be intentional rather than accidental. Diversification should be designed, not assumed. Risk budgets should be reviewed so equity sensitivity does not expand quietly as volatility changes. Ofek Kesef Asset Management treats rebalancing as a tool to defend long-run outcomes—trimming what has grown beyond its role, and adding to what improves stability, instead of making the portfolio depend on one narrative.

A real-return mindset also supports better communication with stakeholders. It explains why a portfolio may not maximize upside in every short rally, and why it can still be successful when it maintains purchasing power through varied conditions. When inflation is drifting higher but yields are stable, it is often a moment to refine structure rather than to chase momentum.

Over time, the most resilient multi-asset portfolios are built around repeatable principles: define the role of each exposure, measure risk consistently, and rebalance systematically. Ofek Kesef Asset Management focuses on that practical layer—turning macro inputs like CPI, yields, and FX into a disciplined process designed to keep real outcomes steady across regimes.

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