US treasuries higher with consumer prices rising less than expected      

Lebanon’s BLOM Bond Index (BBI) decreased  by 2.33% over the last week to reach 85.92 points mainly due to the political deadlock regarding the government’s formation while the JP Morgan Emerging Markets’ Bond Index (EMBI) recorded a 0.44% weekly uptick to stand at 768.25 points. As such, the yields on the (5Y) and (10Y) Lebanese Eurobonds increased by 65 and 43 basis points (bps) to reach 10.90%  and 11.09% respectively ,this week.

In the US, during the past week, yields on the 5Y and 10Y treasuries witnessed a weekly increase of 11 bps and 9 bps and ended the week at 2.87% and 2.97% respectively. In fact, the rise can be attributed to the U.S. government report showing that consumer prices rose less than expected in August, and after solid demand for 30-year bonds at auction. In details, Consumer prices rose 0.2% in August, below the 0.3% market expectations suggesting that inflation isn’t yet a problem that could force fixed-income investors to significantly reduce their investment in government debt.

During the week, the 5Y and 10Y spread between the yield on the Lebanese Eurobonds and their US increased by 54 and 34 basis points (bps)  to reach 803 and 811 bps respectively.

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

13/09/2018 06/09/2018
Lebanon 751 686
KSA 80 81
Dubai 118 126
Brazil 285 282
Turkey 459 549

Weekly Change of Lebanese Eurobonds Prices

  Prices Weekly Yields   Weekly
Maturity Coupon in % 13/09/2018 06/09/2018 Change 13/09/2018 06/09/2018 Change bps
28/11/2019 5.45 94.13 95.88 -1.83% 10.74% 9.06% 169
09/03/2020 6.375 94 96 -2.08% 10.85% 9.28% 157
14/04/2020 5.8 92.75 94.88 -2.24% 10.89% 9.30% 159
19/06/2020 6.15 92.5 94.88 -2.51% 10.92% 9.32% 160
12/04/2021 8.25 94 95.88 -1.96% 10.98% 10.08% 89
04/10/2022 6.1 84.5 86.38 -2.18% 10.93% 10.27% 66
27/01/2023 6 83.13 85 -2.20% 10.95% 10.33% 62
22/04/2024 6.65 82.25 83.75 -1.79% 10.97% 10.55% 42
04/11/2024 6.25 79.25 80.75 -1.86% 10.98% 10.58% 40
03/12/2024 7.00 82.25 83.88 -1.94% 11.01% 10.59% 42
26/02/2025 6.20 78 79.75 -2.19% 11.06% 10.60% 45
12/06/2025 6.25 77.5 79.25 -2.21% 11.07% 10.62% 44
28/11/2026 6.60 76.13 78.13 -2.56% 11.10% 10.65% 45
23/03/2027 6.85 76.88 78.88 -2.54% 11.11% 10.68% 44
29/11/2027 6.75 75.5 77.5 -2.58% 11.05% 10.63% 42
03/11/2028 6.65 73.5 75.75 -2.97% 11.06% 10.60% 46
26/02/2030 6.65 72.25 74.5 -3.02% 10.96% 10.53% 43
22/04/2031 7.00 73.25 75.5 -2.98% 10.96% 10.55% 41
23/03/2032 7.00 73 74.88 -2.51% 10.85% 10.52% 33
02/11/2035 7.05 72 74.13 -2.87% 10.63% 10.29% 34
23/03/2037 7.25 72.25 74.75 -3.34% 10.73% 10.33% 39

 

 

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