Safety Bids Up on Trump Policies and Dovish Fed

The BLOM Bond Index (BBI) rose by a weekly 0.44% to reach 104.13 points as demand for medium and long term Lebanese Eurobonds increased.

The Lebanese index was outpaced by the JP Morgan Emerging Markets’ Bond Index which increased by a weekly 0.69% to 752.93 points.

The yields on the Lebanese Eurobonds maturing in 5 years and 10 years, which have an inverse relationship with prices, respectively declined from last week’s 6.18% and 6.86% to 6.10% and 6.84%, this week.

Demand for US treasuries was also more pronounced in the US with the yields on the 5 Year and 10 Year treasuries sliding from 1.95% and 2.51% last week to 1.92% and 2.48% this week, respectively. Demand for safe-haven assets unsurprisingly went up after the Federal Reserve kept rates unchanged on Wednesday and after President Trump’s new policies sent shock waves within and beyond the US borders.

The spread between the 5 yield on Lebanese Eurobonds and that on US treasuries narrowed by 5 basis points (bps) to 418 bps while the 10 Year spread was up by 1 bp to 436 bps.  

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

  02/02/2017 26/01/2017
Lebanon 447 447
KSA 113 112
Dubai 136 140
Brazil 243 273
Turkey 259 253

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