Disappointing US Retail Sales & Concerns on Chinese Retaliation Boost Demand on US Treasuries

The BLOM Bond Index (BBI) concluded the week rising by 1.17%, to stand at 100.87 points. The BBI also outweighed the JP Morgan Emerging Markets’ Bond Index (EMBI) which added an incremental 0.10% to end the week at 791.5 points. 

The demand for 5 year (5Y) and 10Y Lebanese Eurobonds grew as their respective yields fell from 6.94% and 7.73% to 6.71% and 7.52%.

In the USA, data on retail sales deteriorating for three months in a row now, alongside a growing uncertainty vis-a-vis the risk of Chinese retaliation against the new tariff measures lent support to US treasuries. Both of the week’s highlights suggested a potential stall in economic growth which rendered investors more cautious.

Accordingly, the yields on the 5Y and 10Y US treasuries slipped from 2.63% and 2.86% last week to 2.62% and 2.82% this week, respectively.

As such, the 5Y and 10Y spreads between the yield on the Lebanese Eurobonds and its US comparable contracted from 431 basis points (bps) and 487 bps last week to 409 bps and 470 bps this week.

 

Weekly Change of Lebanese Eurobonds Prices

  Prices Weekly Yields Weekly
Maturity Coupon in % 15/03/2018 08/03/2018 Change 15/03/2018 08/03/2018 Change bps
23/04/2019 5.5 99.5 99.13 0.37% 5.97% 6.31% -34
20/05/2019 6 100 99.6 0.40% 5.99% 6.34% -35
28/11/2019 5.45 98.88 98.25 0.64% 6.15% 6.53% -39
09/03/2020 6.375 100.13 99.38 0.75% 6.30% 6.71% -41
14/04/2020 5.8 98.88 98.2 0.69% 6.38% 6.73% -35
19/06/2020 6.15 99.38 98.75 0.64% 6.44% 6.74% -30
12/04/2021 8.25 104.5 103.75 0.72% 6.61% 6.88% -27
04/10/2022 6.1 97.5 96.63 0.90% 6.75% 6.97% -23
27/01/2023 6 96.75 95.88 0.91% 6.79% 7.01% -22
22/04/2024 6.65 98.38 97.25 1.16% 6.98% 7.21% -23
04/11/2024 6.25 95.88 94.63 1.32% 7.04% 7.28% -24
03/12/2024 7.00 99.5 98.38 1.14% 7.09% 7.31% -21
26/02/2025 6.20 95 93.88 1.19% 7.12% 7.34% -21
12/06/2025 6.25 94.88 93.75 1.21% 7.17% 7.37% -21
28/11/2026 6.60 95 93.63 1.46% 7.39% 7.61% -22
23/03/2027 6.85 95.63 94.25 1.46% 7.53% 7.75% -22
29/11/2027 6.75 94.5 93 1.61% 7.56% 7.79% -23
03/11/2028 6.65 93 91.25 1.92% 7.62% 7.88% -26
26/02/2030 6.65 91.88 90 2.09% 7.70% 7.96% -26
22/04/2031 7.00 93.75 91.88 2.04% 7.77% 8.01% -24
23/03/2032 7.00 93.5 91.5 2.19% 7.77% 8.02% -25
02/11/2035 7.05 92.5 91 1.65% 7.84% 8.01% -17
23/03/2037 7.25 93.5 91.75 1.91% 7.92% 8.11% -19

 

 

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