US Treasury Yields Rise as Federal Reserve Hikes Interest Rates

Lebanon’s BLOM Bond Index (BBI) dropped by 0.88% over the past week to reach 91.51 points. As for the JP Morgan Emerging Markets’ Bond Index (EMBI), it recorded a lesser weekly slip of 0.75% and reached 764.04 points.

Yields on the 5 year (5Y) and 10Y Lebanese Eurobonds rose from last week’s 8.90% and 9.51% to 9.24% and 9.70% this week, respectively.

In the US, the yields on the 5Y and 10Y treasury bills rose from last week’s 2.77% and 2.93% to this week’s 2.85% and 2.98%, respectively.

In fact, demand for US treasuries dropped in anticipation of the Fed’s second interest rate hike of the year. Expectations were met as the Federal Reserve increased its benchmark interest rate to a range of 1.75% to 2% on account of a stronger US economy.

Meanwhile, the 5Y and 10Y spreads between the yield on the Lebanese Eurobonds and its US comparable widened from last week’s 613 basis points (bps) and 658 bps to 639 bps and 672 bps, respectively.

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

6/13/2018 6/7/2018
Lebanon 633 606
KSA 92 88
Dubai 126 116
Brazil 264 254
Turkey 300 274

 

Weekly Change of Lebanese Eurobonds Prices

  Prices Weekly Yields Weekly
Maturity Coupon in % 6/13/2018 6/7/2018 Change 6/13/2018 6/7/2018 Change bps
5/20/2019 6 98.63 98.75 -0.12% 7.54% 7.38% 16
11/28/2019 5.45 97 97.13 -0.13% 7.66% 7.54% 12
3/9/2020 6.375 96.88 97 -0.12% 8.33% 8.24% 9
4/14/2020 5.8 95.63 95.75 -0.13% 8.41% 8.32% 9
6/19/2020 6.15 95.75 95.88 -0.14% 8.49% 8.39% 10
4/12/2021 8.25 98.13 98.63 -0.51% 9.00% 8.80% 20
10/4/2022 6.1 88.75 90 -1.39% 9.33% 8.93% 40
1/27/2023 6 87.38 88.75 -1.54% 9.43% 9.02% 41
4/22/2024 6.65 87.38 88.5 -1.27% 9.51% 9.23% 28
11/4/2024 6.25 84.5 85.5 -1.17% 9.54% 9.30% 24
12/3/2024 7.00 87.88 88.88 -1.13% 9.55% 9.32% 23
2/26/2025 6.20 83.63 84.5 -1.03% 9.56% 9.36% 20
6/12/2025 6.25 83.25 84.13 -1.05% 9.59% 9.39% 20
11/28/2026 6.60 82.38 83.38 -1.20% 9.70% 9.50% 20
3/23/2027 6.85 83.38 84.38 -1.19% 9.70% 9.51% 19
11/29/2027 6.75 82 83 -1.20% 9.70% 9.51% 19
11/3/2028 6.65 80.25 81.38 -1.39% 9.71% 9.51% 20
2/26/2030 6.65 79.5 80.5 -1.24% 9.60% 9.43% 17
4/22/2031 7.00 80.63 81.88 -1.53% 9.66% 9.46% 20
3/23/2032 7.00 80 81.25 -1.54% 9.65% 9.46% 19
11/2/2035 7.05 78.75 79.63 -1.11% 9.58% 9.46% 12
3/23/2037 7.25 79.75 80.63 -1.09% 9.59% 9.47% 12

 

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