US Treasury Yields Down after Fed kept rates steady

The BLOM Bond Index (BBI) rose by a weekly 1.87%, ending this week at 91.41 points.Also, the JP Morgan Emerging Markets’ Bond Index (EMBI) increased by a marginal 1.03% to end the week at 820.76 points. As such, the demand on 5 year (5Y) and 10Y Lebanese Eurobonds grew over the week, as their respective yields dropped  from 10.93% and 10.25% to 10.08% and 10.01%, respectively.

In the US, the demand for 5 Year and 10 Year US treasuries increased, driving yields lower by 9 basis point(bps) each to reach 2.34% and 2.54%, respectively.

In details,the yields on the 5Y and 10Y US treasuries fell to their lowest levels since the start of the year after the Federal reserve held interest rates steady and signaled little appetite for raising them again in 2019. The Fed also signaled signs of weakness in business investment and consumer spending  areas, and downgraded its economic forecast for the US economy , expecting a 2.1 percent growth this year, down from the 2.3 percent it forecast in December and projecting growth of just 1.9 percent in 2020.

The investors in turn , worried about the economic outlook and  viewed the move as more restrained than expected , US treasury yields were dragged lower as a result.

Accordingly, the 5Y and 10Y spread between the yield on the Lebanese Eurobonds and its US comparable narrowed from 850 and 762 basis points (bps) last week to 774 and 757 bps this week .

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

22/03/2019 15/03/2019
Lebanon 791 748
KSA 84 79
Dubai 125 123
Brazil 163 156
Turkey 352 321

 Weekly Change of Lebanese Eurobonds Prices

  Prices Weekly Yields   Weekly
Maturity Coupon in % 21/03/2019 14/03/2019 Change 21/03/2019 14/03/2019 Change bps
3/9/2020 6.375 97.13 95 2.24% 9.56% 10.69% -113
4/14/2020 5.8 95.63 93.63 2.14% 10.24% 10.95% -71
6/19/2020 6.15 95.25 93.25 2.14% 10.31% 11.03% -72
4/12/2021 8.25 95.25 93.25 2.14% 10.88% 11.59% -71
10/4/2022 6.1 88.50 84.88 4.26% 10.05% 11.04% -99
1/27/2023 6 87.13 83 4.98% 10.12% 11.23% -112
4/22/2024 6.65 86.25 81.38 5.98% 10.18% 11.36% -119
11/4/2024 6.25 83.38 78.75 5.88% 10.21% 11.26% -106
12/3/2024 7.00 86.38 81.75 5.66% 10.21% 11.27% -106
2/26/2025 6.20 83.50 77.63 7.56% 9.95% 11.29% -134
6/12/2025 6.25 83.25 77.5 7.42% 9.92% 11.20% -129
11/28/2026 6.60 82.13 76.25 7.71% 9.98% 11.17% -119
3/23/2027 6.85 82.75 77 7.47% 10.04% 11.17% -113
11/29/2027 6.75 81.38 75.75 7.43% 10.01% 11.08% -107
11/3/2028 6.65 80.50 74.25 8.42% 9.83% 10.97% -114
2/26/2030 6.65 78.50 72.75 7.90% 9.91% 10.92% -100
4/22/2031 7.00 78.50 73.38 6.98% 10.12% 10.98% -86
3/23/2032 7.00 79.50 73.13 8.71% 9.83% 10.86% -104
11/2/2035 7.05 78.75 72.38 8.80% 9.64% 10.59% -95
3/23/2037 7.25 79.25 72.63 9.11% 9.71% 10.68% -97

 

 

 

 

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