Lower Demand for US treasuries as trade tensions ease

BBI retreated this week, falling by 0.16% to reach 91.31 points. The JP Morgan Emerging Markets’ Bond Index (EMBI) recorded a 0.45% weekly uptick to stand at 783.09 points.

As such, the yields on the 5 year (5Y) Lebanese Eurobonds rose from last week’s 9.45% to end the week at 9.54%. As for the yields on the 10 year (10Y) Lebanese Eurobonds, they dropped by 4 basis points to reach 9.65% this week.

In the US, the yields on the 5Y and 10Y treasury bills rose by 12 and 14 basis points respectively .In fact, demand on treasuries decreased due the fact that the European Central Bank decided to keep interest rates steady and the Trump administration seemed to have reached an agreement with their European allies, averting a trade war.

Accordingly, the 5Y and 10Y spreads between the yield on the Lebanese Eurobonds and their US comparable narrowed from last week’s 671 basis points (bps) and 685 bps to 668 bps and 667 bps, respectively.

Weekly Change of Lebanese Eurobonds Prices

  Prices Weekly Yields Weekly
Maturity Coupon in % 7/26/2018 7/19/2018 Change 7/26/2018 7/19/2018 Change bps
11/28/2019 5.45 97.13 97.63 -0.51% 7.74% 7.31% 43
3/9/2020 6.375 97.25 97.38 -0.13% 8.22% 8.11% 11
4/14/2020 5.8 96 96.25 -0.26% 8.34% 8.15% 19
6/19/2020 6.15 96 96.38 -0.39% 8.47% 8.23% 24
4/12/2021 8.25 97.5 97.75 -0.26% 9.30% 9.19% 11
10/4/2022 6.1 88.13 88.38 -0.28% 9.60% 9.51% 9
1/27/2023 6 86.75 86.75 0.00% 9.70% 9.69% 1
4/22/2024 6.65 86.5 86.75 -0.29% 9.77% 9.70% 7
11/4/2024 6.25 83.63 84 -0.44% 9.80% 9.70% 10
12/3/2024 7.00 86.9 87.25 -0.40% 9.82% 9.73% 9
2/26/2025 6.20 82.75 83.13 -0.46% 9.82% 9.72% 10
6/12/2025 6.25 82.38 82.88 -0.60% 9.83% 9.71% 12
11/28/2026 6.60 82.75 82.63 0.15% 9.66% 9.67% -1
3/23/2027 6.85 83.75 83.63 0.14% 9.66% 9.68% -2
11/29/2027 6.75 82.25 82.25 0.00% 9.68% 9.67% 1
11/3/2028 6.65 80.75 80.63 0.15% 9.64% 9.66% -2
2/26/2030 6.65 79.75 79.38 0.47% 9.58% 9.64% -6
4/22/2031 7.00 81 80.88 0.15% 9.62% 9.63% -1
3/23/2032 7.00 80.25 80.38 -0.16% 9.63% 9.60% 3
11/2/2035 7.05 79.5 79.75 -0.31% 9.48% 9.45% 3
3/23/2037 7.25 80.5 80.75 -0.31% 9.50% 9.46% 4

 

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