Demand for US Treasuries Drops Further on Strong Economic Data

Lebanon’s BLOM Bond Index (BBI) dropped by 1.17% over the past week to reach 93.49 points. As for the JP Morgan Emerging Markets’ Bond Index (EMBI), it recorded a lesser weekly downtick of 0.57% and reached 768.92 points.

Yields on the 5 year (5Y) and 10Y Lebanese Eurobonds rose from last week’s 8.35% and 8.93% to 8.68% and 8.97% this week, respectively.

In the US, demand for US treasuries slumped over the past week with the yield on the US treasuries maturing in 5 years rising from last week’s 2.83% to 2.94% this week while the yield on the 10 year treasuries reached a 7-years high of 3.11%.

The release of strong retail sales data in the US, which showed a 0.3% monthly increase in April, boosts the likelihood of a future increase in interest rates by the Federal Reserve.

Meanwhile, the 5Y spread between the yield on the Lebanese Eurobonds and its US comparable widened from last week’s 552 basis points (bps) to this week’s 574 bps. Meanwhile, the 10Y spread narrowed from 596 bps to this week’s 586 bps.

5 Year Credit Default Swaps, Mid-Prices (in basis points)

 

17/05/2018 10/05/2018
Lebanon 594 576
KSA 90 88
Dubai 115 114
Brazil 194 185
Turkey 272 236

 

Weekly Change of Lebanese Eurobonds Prices

  Prices Weekly Yields Weekly
Maturity Coupon in % 17/05/2018 10/05/2018 Change 17/05/2018 10/05/2018 Change bps
20/05/2019 6 98.13 98.75 -0.63% 7.97% 7.28% 68
28/11/2019 5.45 96.25 97.13 -0.91% 8.10% 7.44% 66
09/03/2020 6.375 96.5 98 -1.53% 8.49% 7.56% 93
14/04/2020 5.8 95.25 96.75 -1.55% 8.54% 7.64% 90
19/06/2020 6.15 95.5 97.13 -1.68% 8.54% 7.64% 90
12/04/2021 8.25 99 100 -1.00% 8.64% 8.25% 40
04/10/2022 6.1 90.5 91.75 -1.36% 8.75% 8.38% 38
27/01/2023 6 89.38 90.75 -1.51% 8.81% 8.41% 39
22/04/2024 6.65 90 91.13 -1.24% 8.85% 8.58% 27
04/11/2024 6.25 87.25 88.5 -1.41% 8.88% 8.60% 28
03/12/2024 7.00 90.75 92 -1.36% 8.89% 8.62% 27
26/02/2025 6.20 86.5 87.5 -1.14% 8.89% 8.67% 22
12/06/2025 6.25 86.25 87.25 -1.15% 8.91% 8.70% 22
28/11/2026 6.60 85.5 86.5 -1.16% 9.08% 8.89% 19
23/03/2027 6.85 86.5 87.5 -1.14% 9.10% 8.92% 18
29/11/2027 6.75 85.25 86.13 -1.02% 9.10% 8.94% 16
03/11/2028 6.65 83.63 84.63 -1.18% 9.11% 8.94% 17
26/02/2030 6.65 82.5 83.5 -1.20% 9.10% 8.94% 16
22/04/2031 7.00 84.25 85.25 -1.17% 9.09% 8.95% 15
23/03/2032 7.00 83.75 84.63 -1.04% 9.08% 8.96% 13
02/11/2035 7.05 82.38 83.25 -1.05% 9.08% 8.96% 12
23/03/2037 7.25 83.5 84.5 -1.18% 9.09% 8.97% 13

 

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