US Treasury Yields Rise as Fed Signals Interest Rate Increase

The BLOM Bond Index (BBI) fell by a weekly 0.78% to reach 104.19 points; nonetheless, it outperformed the JP Morgan Emerging Markets’ Bond Index which also dropped by a weekly 0.91% to 755.85 points.

Demand for Lebanese Eurobonds maturing in 5 and 10 years plunged this week. As such, the 5Y yields rose from 5.76% to 5.96% and the 10Y yields rose from 6.72% to 6.93%.

Moreover, demand for US treasuries maturing in 5 years and 10 years also witnessed a downfall during the week with their yields increasing from 2.03% and 2.45% to 2.13% and 2.60%, respectively.   Yields on US treasuries rose after Federal Reserve officials strongly signaled that they plan to raise interest rates at their March 14,15 policy meeting. In addition, yields also rallied on the back of the European Central Bank’s (ECB) President Mario Draghi comments that suggested the ECB was becoming more optimistic about the Eurozone economy and less inclined to provide additional stimulus.

The 5 year and 10 year spread between the Lebanese Eurobonds’ yields and the US treasuries broadened by 10 bps and 6 bps to stand at 383 bps and 433 bps, respectively.

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

  09/03/2017 02/03/2017
Lebanon 444 414
KSA 97 94
Dubai 121 116
Brazil 236 224
Turkey 240 244

 

  Prices Weekly Yields Weekly
Maturity Coupon in % 09/03/2017 02/03/2017 Change 09/03/2017 02/03/2017 Change bps
12/06/2018 5.15 101 101 0.00% 4.33% 4.34% -1
12/11/2018 5.15 101.25 101.13 0.12% 4.37% 4.45% -8
23/04/2019 5.5 100.75 101.25 -0.49% 5.13% 4.88% 24
20/05/2019 6 101.75 102.25 -0.49% 5.15% 4.92% 23
28/11/2019 5.45 100.63 101.13 -0.49% 5.20% 5.00% 20
09/03/2020 6.375 102.5 103 -0.49% 5.46% 5.29% 17
14/04/2020 5.8 100.75 101.25 -0.49% 5.54% 5.36% 17
19/06/2020 6.15 101.25 102.13 -0.86% 5.73% 5.44% 29
12/04/2021 8.25 108.5 109.5 -0.91% 5.88% 5.63% 25
04/10/2022 6.1 100 100.75 -0.74% 6.10% 5.94% 16
27/01/2023 6 99.5 99.75 -0.25% 6.11% 6.06% 5
22/04/2024 6.65 100.5 101 -0.50% 6.57% 6.48% 9
04/11/2024 6.25 98 98.5 -0.51% 6.60% 6.51% 9
03/12/2024 7.00 102.25 102.75 -0.49% 6.65% 6.57% 8
26/02/2025 6.20 97.25 97.75 -0.51% 6.66% 6.57% 8
12/06/2025 6.25 97.25 97.75 -0.51% 6.70% 6.61% 8
28/11/2026 6.60 97.75 99.13 -1.39% 6.92% 6.73% 20
29/11/2027 6.75 97.63 99.5 -1.88% 7.07% 6.82% 25
03/11/2028 6.65 96.5 98.25 -1.78% 7.11% 6.88% 23
26/02/2030 6.65 97 98.13 -1.15% 7.01% 6.87% 14
22/04/2031 7.00 98.5 99.5 -1.01% 7.19% 7.08% 11
02/11/2035 7.05 98 99.25 -1.26% 7.26% 7.13% 12

 

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