Busy Week on the US Treasury Market in light of US Companies Quarterly Earnings Report

Lebanon’s BLOM Bond Index (BBI) this week recorded a downtick by 0.15% to close at 89.34 points, due to a lower demand for 5Y and 10Y Lebanese Eurobonds. The JP Morgan Emerging Markets’ Bond Index (EMBI) witnessed also a 0.22% weekly decrease to stand at 764.27 points. As such, the yields on (10Y) Lebanese Eurobonds increased by 5 basis points (bps) to reach 10.25%. However, the yields on (5Y) Lebanese Eurobonds decreased by 10 bps to stand at 10.20%.

In the US, the yields on the (5Y) treasuries witnessed a downtick of 2 bps ending the week at 2.96% while the yields on (10Y) treasuries ended the week unchanged to stand at 3.14%. In fact, the week was the busiest one of the quarterly earnings season with 37% of the companies in the S&P 500 reporting results noting that Amazon and Google reported a slowdown in revenue growth in the third quarter. Moreover, concerns about the global economy, the impact of U.S. tariffs on the Chinese economy and signs of slowing growth in Europe led to decline in US Equity market , and higher demand on US treasuries noting that on Thursday, the yields on the (5Y) and (10Y) treasuries stood at 2.91% and 3.08%, respectively.

Yields on the 5Y and 10Y treasuries then increased as worries about the Trump administration’s tariffs on Chinese imported goods could stoke inflation led to a decrease in demand for US Government bonds pushing the yields higher by the end of this week.

Against these bond market developments over the week, the 5Y spread between the yield on the Lebanese Eurobonds and their US counterparts narrowed by 8 bps to settle at 724 while the 10Y spread between the yield on the Lebanese Eurobonds and their US counterparts winded by 5bps to settle at 711 bps.


Leave a Reply

Your email address will not be published. Required fields are marked *