Weakest US Jobs in 17 months Ups demand for US Treasuries

The BLOM Bond Index (BBI) ended the week at 89.73 points, declining  weekly by 1.12% while the JP Morgan Emerging Markets’ Bond Index (EMBI) increased by a marginal 0.71% to end the week at 812.39 points. As such, the demand on 5 year (5Y) and 10Y Lebanese Eurobonds retreated over the week, as their respective yields grew from 10.46% and 10.05% to 10.93% and 10.25%, respectively.

In the US, the demand for 5 Year and 10 Year US treasuries increased, driving yields lower by 6 basis point(bps) each to reach 2.43% and 2.63%, respectively. The demand for US bonds was driven by many events during the week. First, the release of US February job report showed a much weaker-than-expected creation job. In fact, the U.S. economy added 20,000 jobs in February down from the 304,000 jobs in the previous month, which upped investors concern about the slowing economy. In addition, investors showed strong demand for the Treasury Department’s auction of $24 billion of 10 Year treasuries pushing  yields lower. Moreover, complications about the Brexit deal raised doubts about the future of the UK.On Thursday the parliament voted to delay the U.K.’s exit from the EU. In details, British lawmakers rejected on Wednesday a no deal Brexit, only a day after Parliament voted against Prime Minister Theresa May’s withdrawal agreement for a second time in the past few months and.

Accordingly, the 5Y and 10Y spread between the yield on the Lebanese Eurobonds and its US comparable widened from 797 and 736 basis points (bps) last week to 850 and 762 bps this week .

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

14/03/2019 07/03/2019
Lebanon 748 755
KSA 79 87
Dubai 123 126
Brazil 156 165
Turkey 321 330

Weekly Change of Lebanese Eurobonds Prices

  Prices Weekly Yields   Weekly
Maturity Coupon in % 14/03/2019 07/03/2019 Change 14/03/2019 07/03/2019 Change bps
09/03/2020 6.375 95.00 96.292 -1.34% 10.69% 10.35% 34
14/04/2020 5.8 93.63 94.945 -1.39% 10.95% 10.77% 18
19/06/2020 6.15 93.25 94.682 -1.51% 11.03% 10.68% 35
12/04/2021 8.25 93.25 94.419 -1.24% 11.59% 11.30% 29
04/10/2022 6.1 84.88 87.103 -2.55% 11.04% 10.52% 52
27/01/2023 6 83.00 86.091 -3.59% 11.23% 10.44% 80
22/04/2024 6.65 81.38 85.039 -4.30% 11.36% 10.49% 87
04/11/2024 6.25 78.75 82.881 -4.98% 11.26% 10.31% 95
03/12/2024 7.00 81.75 85.614 -4.51% 11.27% 10.39% 88
26/02/2025 6.20 77.63 82.96 -6.42% 11.29% 10.07% 123
12/06/2025 6.25 77.50 83.577 -7.27% 11.20% 9.82% 139
28/11/2026 6.60 76.25 82.117 -7.14% 11.17% 9.97% 120
23/03/2027 6.85 77.00 82.341 -6.49% 11.17% 10.11% 106
29/11/2027 6.75 75.75 81.34 -6.87% 11.08% 10.00% 108
03/11/2028 6.65 74.25 79.999 -7.19% 10.97% 9.91% 106
26/02/2030 6.65 72.75 78.321 -7.11% 10.92% 9.94% 98
22/04/2031 7.00 73.38 78.333 -6.32% 10.98% 10.14% 84
23/03/2032 7.00 73.13 78.491 -6.83% 10.86% 9.98% 88
02/11/2035 7.05 72.38 78.042 -7.26% 10.59% 9.74% 85
23/03/2037 7.25 72.63 78.386 -7.34% 10.68% 9.83% 85

Leave a Reply

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