US Treasury Yields Down Amid Tariff Tensions

Lebanon’s BLOM Bond Index (BBI) witnessed a marginal downtick of 0.57% over the week ending May 30th to reach 88.78points while the JP Morgan Emerging Markets’ Bond Index (EMBI) recorded an incremental uptick of 0.37% to reach 827.53 points.

In Lebanon, the demand on the 5 year (5Y) and 10Y Lebanese Eurobonds retreated over the week as their respective yields grew from 11.41% and 10.80% to 11.53% and 10.92%, respectively. As for the 5Y CDS,  retreated from 877 basis point last week to 866 by May 30, 2019.

In the US, the bonds price rose as investors drove demand for safe assets.As a result, the yields on 5Y and 10Y US treasuries slipped from 2.11% and 2.31% to 2.03% and 2.22% (the lowest since the start of the year), respectively. In details, equities markets around the world have sold off sharply following the escalating trade tensions between the US and China, thus increasing demand on treasuries. In fact, Beijing  warned the US of cutting off its rare-earth-minerals trade with the US which could disrupt the business of U.S. tech companies. Moreover, on Thursday, US president announced that the U.S. would impose a 5% tariff on all goods from Mexico.

Accordingly, the 5Y and 10Y spread between the yield on the Lebanese Eurobonds and their US comparables winded from 930 and 849 basis points (bps) last week to 950 and 870 bps this week.

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

30/05/2019 23/05/2019
Lebanon 866 877
KSA 93 93
Dubai 138 145
Brazil 180 181
Turkey 492 519

 

Weekly Change of Lebanese Eurobonds Prices

  Prices Weekly Yields   Weekly
Maturity Coupon in % 30/05/2019 23/05/2019 Change 30/05/2019 23/05/2019 Change bps
12/04/2021 8.25 95.06 95.31 -0.26% 11.25% 11.06% 19
04/10/2022 6.1 85.33 85.48 -0.18% 11.50% 11.41% 9
27/01/2023 6 83.57 83.80 -0.27% 11.64% 11.52% 12
22/04/2024 6.65 81.72 82.05 -0.40% 11.65% 11.53% 12
04/11/2024 6.25 79.71 80.07 -0.45% 11.36% 11.24% 12
03/12/2024 7.00 82.01 82.29 -0.35% 11.50% 11.41% 9
26/02/2025 6.20 79.25 79.75 -0.63% 11.19% 11.04% 15
12/06/2025 6.25 79.83 80.54 -0.88% 10.90% 10.70% 20
28/11/2026 6.60 78.36 78.98 -0.78% 10.90% 10.75% 15
23/03/2027 6.85 78.42 79.00 -0.74% 11.04% 10.90% 14
29/11/2027 6.75 77.21 77.85 -0.82% 10.94% 10.79% 15
03/11/2028 6.65 76.93 77.36 -0.56% 10.57% 10.48% 9
26/02/2030 6.65 74.30 75.01 -0.95% 10.74% 10.60% 14
22/04/2031 7.00 74.99 75.54 -0.73% 10.78% 10.67% 11
23/03/2032 7.00 77.68 78.08 -0.51% 10.15% 10.08% 7
02/11/2035 7.05 74.29 75.21 -1.22% 10.33% 10.19% 14
23/03/2037 7.25 75.27 75.83 -0.74% 10.31% 10.22% 9

 

 

 

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