US treasury yields up on hopes of ending the trade war between the US and China

 The BLOM Bond Index (BBI) ended the week at 92.08 points, up by a weekly 3.37%. As such, the demand on 5 year (5Y) and 10Y Lebanese Eurobonds grew over the week, as their respective yields went down from 10.87% and 10.50% to 9.99% and 9.93%, respectively. As for the JP Morgan Emerging Markets’ Bond Index (EMBI) it also increased by a marginal 0.39% to end the week at 822.77 points.

In the US, the demand for 5 Year and 10 Year US treasuries decreased , driving yields upper by 12 basis points(bps) for each , to reach 2.32% and 2.51%, respectively.

In fact , demand on US treasuries went down as Washington and Beijing appeared to be closing in on a trade deal this week. In details, U.S. officials said China had made proposals on a range of issues that go further than it has before. The wall street Journal reported two days ago, that Trump is expecting to announce the date of a trade summit with the Chinese leader Xi Jinping on Thursday, which has lifted business and consumer sentiment.

In addition to that, Fed Vice Chairman Randal Quarles declared last Friday that additional rate hikes will be appropriate, expressing his positivity  and confidence in the economic outlook and the expected growth in the incoming years  for the US.

Accordingly, the 5Y and 10Y spread between the yield on the Lebanese Eurobonds and its US comparable narrowed from 867 and 811 basis points (bps) last week to 770 and 752 bps this week .

 

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

5/4/2019 29/03/2019
Lebanon 788 828
KSA 79 87
Dubai 134 137
Brazil 173 185
Turkey 387 449

 Weekly Change of Lebanese Eurobonds Prices

  Prices Weekly Yields   Weekly
Maturity Coupon in % 4/4/2019 28/03/2019 Change 4/4/2019 28/03/2019 Change bps
3/9/2020 6.375 97.50 96.195 1.36% 9.24% 10.70% -146
4/14/2020 5.8 96.50 94.827 1.76% 9.46% 11.18% -171
6/19/2020 6.15 96.38 94.542 1.94% 9.39% 11.02% -163
4/12/2021 8.25 95.88 93.344 2.72% 10.57% 12.02% -145
10/4/2022 6.1 88.88 86.331 2.95% 9.95% 10.88% -93
1/27/2023 6 87.50 84.937 3.02% 10.03% 10.91% -88
4/22/2024 6.65 86.25 83.557 3.22% 10.21% 10.96% -75
11/4/2024 6.25 84.13 81.376 3.38% 10.05% 10.76% -71
12/3/2024 7.00 85.88 83.44 2.92% 10.39% 10.99% -60
2/26/2025 6.20 84.00 81.046 3.64% 9.85% 10.59% -74
6/12/2025 6.25 84.00 81.691 2.83% 9.76% 10.31% -55
11/28/2026 6.60 82.88 79.612 4.10% 9.84% 10.54% -70
3/23/2027 6.85 82.75 79.958 3.49% 10.05% 10.64% -58
11/29/2027 6.75 81.88 78.95 3.71% 9.92% 10.50% -58
11/3/2028 6.65 81.00 77.842 4.06% 9.76% 10.34% -58
2/26/2030 6.65 79.38 75.949 4.52% 9.77% 10.38% -61
4/22/2031 7.00 78.75 76.333 3.17% 10.12% 10.50% -38
3/23/2032 7.00 80.63 76.889 4.87% 9.66% 10.26% -60
11/2/2035 7.05 79.00 75.961 4.00% 9.62% 10.06% -43
3/23/2037 7.25 79.63 75.998 4.78% 9.67% 10.19% -51

 

 

 

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