US treasury yields fluctuated this week: Dovish FED Minutes but strong US data 

In the week ending April 11th 2019, the BLOM Bond Index (BBI) closed at 92.42 points, up by a marginal 0.37%. The BBI surpassed the JP Morgan Emerging Markets’ Bond Index (EMBI), which closed at 821.73 points, down by a weekly 0.13%.

The demand on the 5 year (5Y) and 10Y Lebanese Eurobonds rose over the week, as their respective yields retreated from 9.99% and 9.93% to 9.91% and 9.89%, respectively.

In the US, the demand for 5Y treasuries picked up slightly, with their respective yields recording a weekly downtick of 1 basis points (bps) to reach 2.31% by April 11th 2019. Meanwhile, yields on the 10Y US treasuries remained unchanged, knowing they recorded fluctuations before and after the release of the FED’s March minutes on April 10th.

In a nutshell, the fluctuation in the overall treasury yields in the US was fueled by several market updates. The yields retreated over the week on the back of the FED minutes which reiterated the FED’s dovish stand on raising interest rates given multiple uncertainties feeding into the USA’s economic outlook. Yields on US treasuries were further pressured following Draghi’s downbeat comments on the Eurozone’s economy. However, the yields rose back up over the week, owing it to the release of US jobless claims data Thursday. The latter revealed initial claims for state unemployment benefits fell by 8,000 to 196,000 in March, pointing to sustained labor market strength.

Accordingly, the 5Y and 10Y spread between the yield on the Lebanese Eurobonds and its US comparable narrowed from 770 and 752 bps last week to 760 and 738 bps this week.

Weekly Change of Lebanese Eurobonds Prices 

  Prices Weekly Yields   Weekly
Maturity Coupon in % 11/04/2019 04/04/2019 Change 11/04/2019 04/04/2019 Change bps
09/03/2020 6.375 97.38 97.5 -0.12% 9.44% 9.24% 20
14/04/2020 5.8 96.56 96.5 0.06% 9.47% 9.46% 1
19/06/2020 6.15 96.27 96.38 -0.11% 9.54% 9.39% 15
12/04/2021 8.25 96.29 95.88 0.43% 10.35% 10.57% -22
04/10/2022 6.1 89.23 88.88 0.39% 9.84% 9.95% -11
27/01/2023 6 87.79 87.5 0.33% 9.94% 10.03% -8
22/04/2024 6.65 86.45 86.25 0.23% 10.17% 10.21% -4
04/11/2024 6.25 84.48 84.13 0.42% 9.97% 10.05% -8
03/12/2024 7.00 86.45 85.88 0.66% 10.26% 10.39% -14
26/02/2025 6.20 84.41 84 0.48% 9.76% 9.85% -9
12/06/2025 6.25 84.86 84 1.03% 9.56% 9.76% -20
28/11/2026 6.60 83.16 82.88 0.33% 9.79% 9.84% -5
23/03/2027 6.85 83.30 82.75 0.66% 9.94% 10.05% -11
29/11/2027 6.75 82.18 81.88 0.37% 9.87% 9.92% -5
03/11/2028 6.65 81.42 81 0.52% 9.69% 9.76% -7
26/02/2030 6.65 79.66 79.38 0.36% 9.73% 9.77% -5
22/04/2031 7.00 79.17 78.75 0.53% 10.05% 10.12% -7
23/03/2032 7.00 80.64 80.63 0.01% 9.66% 9.66% 0
02/11/2035 7.05 79.50 79 0.63% 9.55% 9.62% -7
23/03/2037 7.25 80.12 79.63 0.61% 9.61% 9.67% -7

 

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