US treasuries steady by the end of the week Ahead of Additional Tariffs US on China

Lebanon’s BLOM Bond Index (BBI) decreased  by 1.39% over the last week to reach 87.97 points mainly due to the political deadlock regarding the government’s formation the JP Morgan Emerging Markets’ Bond Index (EMBI) also recorded a 0.43% weekly decline to stand at 764.87 points. As such, the yields on the (5Y) and (10Y) Lebanese Eurobonds increased by 40 and 25 basis points (bps) to reach 10.25%  and 10.65% respectively ,this week.

In the US, during the past week, yields on the 5Y and 10Y treasuries witnessed an increase followed by a decline at the end of the week. In fact, the yields on 5Y and 10Y rose on Tuesday 2.78% and 2.99% due to The IHS Markit US Manufacturing PMI which registered 54.7 in August of 2018 up to 59.3 in July indicating an overall improvement in the health of the U.S. manufacturing sector. However, the decision concerning the additional $200 billion imports tariffs on China and the ADP employment data showing private sector payrolls added 163,000  in August below market expectations of 190,000 drove the decline of  yields on on the 5Y and 10Y treasuries which ended the week at  2.76% and 2.88% respectively.

 

During the week, the 5Y and 10Y spread between the yield on the Lebanese Eurobonds and their US increased by 102 and 92 basis points (bps)  to reach 749 and 777 bps respectively.

 

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

06/09/2018 30/08/2018
Lebanon 686 648
KSA 81 80
Dubai 126 122
Brazil 282 301
Turkey 549 522

 Weekly Change of Lebanese Eurobonds Prices

  Prices Weekly Yields   Weekly
Maturity Coupon in % 06/09/2018 30/08/2018 Change 06/09/2018 30/08/2018 Change bps
28/11/2019 5.45 95.88 96.25 -0.38% 9.06% 8.68% 38
09/03/2020 6.375 96 96.5 -0.52% 9.28% 8.88% 40
14/04/2020 5.8 94.88 95.38 -0.52% 9.30% 8.91% 38
19/06/2020 6.15 94.88 95.38 -0.52% 9.32% 8.97% 34
12/04/2021 8.25 95.88 96.88 -1.03% 10.08% 9.62% 46
04/10/2022 6.1 86.38 87.5 -1.28% 10.27% 9.88% 39
27/01/2023 6 85 86 -1.16% 10.33% 10.00% 33
22/04/2024 6.65 83.75 85 -1.47% 10.55% 10.21% 34
04/11/2024 6.25 80.75 82.13 -1.68% 10.58% 10.22% 36
03/12/2024 7.00 83.88 85.25 -1.61% 10.59% 10.25% 34
26/02/2025 6.20 79.75 81 -1.54% 10.60% 10.28% 32
12/06/2025 6.25 79.25 80.63 -1.71% 10.62% 10.28% 34
28/11/2026 6.60 78.13 79.5 -1.72% 10.65% 10.35% 30
23/03/2027 6.85 78.88 80 -1.40% 10.68% 10.44% 24
29/11/2027 6.75 77.5 78.75 -1.59% 10.63% 10.38% 26
03/11/2028 6.65 75.75 77 -1.62% 10.60% 10.36% 25
26/02/2030 6.65 74.5 76.13 -2.14% 10.53% 10.23% 30
22/04/2031 7.00 75.5 77 -1.95% 10.55% 10.29% 26
23/03/2032 7.00 74.88 77 -2.75% 10.52% 10.16% 36
02/11/2035 7.05 74.13 76.13 -2.63% 10.29% 9.98% 31
23/03/2037 7.25 74.75 77 -2.92% 10.33% 10.00% 34

 

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