Demand for US Treasuries Weakened on Prospects of a Positive Economic Outlook

The BLOM Bond Index (BBI) concluded the past week contracting by an incremental 0.4%, to stand at 99.97 points. It managed to surpass the JP Morgan Emerging Markets’ Bond Index (EMBI) which slipped by 0.50% over the week, to close at 790.54 points. 

The demand for 5 year (5Y) and 10Y Lebanese Eurobonds slowed down during the week of April 16th as their respective yields rose from 6.71% and 7.71% to 6.77% and 7.85%.

In the USA, investors shied away from treasury bills, owing it to the release of the FED’s Beige Book this week which confirmed a “positive outlook” on the US economy in March and early April 2018, driven by robust commercial and industrial borrowing, improved consumer spending, and tighter labour markets. 

Accordingly, the yields on the 5Y and 10Y US treasuries climbed from 2.67% and 2.83% to 2.77% and 2.92%, respectively.

In its turn, the 10Y spread between the yield on the Lebanese Eurobonds and its US comparable widened from 488 basis points (bps) to 493 bps; however, the 5Y spread between the yield on the Lebanese Eurobonds and its US comparable slid from 404 bps to 400 bps this week.

 

Weekly Change of Lebanese Eurobonds Prices

  Prices Weekly Yields Weekly
Maturity Coupon in % 19/04/2018 12/04/2018 Change 19/04/2018 12/04/2018 Change bps
23/04/2019 5.5 99.75 99.88 -0.13% 5.76% 5.62% 14
20/05/2019 6 100.25 100.38 -0.13% 5.75% 5.63% 12
28/11/2019 5.45 99.38 99.6 -0.22% 5.86% 5.71% 15
09/03/2020 6.375 100.38 100.5 -0.12% 6.15% 6.09% 6
14/04/2020 5.8 99.25 99.38 -0.13% 6.21% 6.13% 7
19/06/2020 6.15 99.75 99.88 -0.13% 6.27% 6.20% 7
12/04/2021 8.25 104.38 104.63 -0.24% 6.61% 6.53% 8
04/10/2022 6.1 97.13 97.25 -0.12% 6.86% 6.82% 3
27/01/2023 6 96.25 96.38 -0.13% 6.93% 6.90% 4
22/04/2024 6.65 97.5 97.75 -0.26% 7.17% 7.11% 5
04/11/2024 6.25 95 95.25 -0.26% 7.22% 7.17% 5
03/12/2024 7.00 98.5 98.88 -0.38% 7.29% 7.21% 7
26/02/2025 6.20 94.13 94.5 -0.39% 7.30% 7.23% 7
12/06/2025 6.25 94 94.38 -0.40% 7.34% 7.27% 7
28/11/2026 6.60 93 93.63 -0.67% 7.73% 7.62% 11
23/03/2027 6.85 93.63 94.5 -0.92% 7.85% 7.71% 14
29/11/2027 6.75 92.5 93.5 -1.07% 7.88% 7.72% 16
03/11/2028 6.65 91.13 92.25 -1.21% 7.91% 7.74% 17
26/02/2030 6.65 90 90.38 -0.42% 7.97% 7.91% 5
22/04/2031 7.00 92 92.5 -0.54% 8.00% 7.93% 7
23/03/2032 7.00 91.5 92 -0.54% 8.02% 7.96% 6
02/11/2035 7.05 90.75 91.25 -0.55% 8.04% 7.98% 6
23/03/2037 7.25 91.5 92 -0.54% 8.14% 8.08% 6

 

 

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