Geopolitical Tensions Up Demand for US Treasuries

The BLOM Bond Index (BBI) registered a 0.22% weekly uptick to reach 101.82 points. Likewise, the JP Morgan Emerging Markets’ Bond Index gained a weekly 0.79% to reach 735.53 points.

Demand for Lebanese Eurobonds maturing in 5 years and 10 years rose over the past week as their yields fell from 6.75% and 7.20% to reach 6.68% and 7.16% this week.

US treasuries gained some respite after six-weeks of selloffs with the yields on the benchmark notes maturing in 5 years and 10 years decreasing from last week’s 2.1% and 2.6% to 2.04% and 2.5% this week, respectively. Demand for safe-haven assets rose after the violent attack in Berlin and the killing of a Russian envoy in Turkey.

As for the spread between the yields on the 5 Year Lebanese Eurobonds and their US comparable, it decreased by a weekly 0.22% to 464 bps while the 10 Year spread widened by 0.22% to 461 bps.

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

22/12/2016 15/12/2016
Lebanon 517 541
KSA 113 119
Dubai 148 143
Brazil 283 295
Turkey 274

287

 

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