Weak US Data and Attractive Yields Boost Demand for US Treasuries

The BLOM Bond Index (BBI) rose by a weekly 0.12% to reach 101.94 points but was outpaced by the JP Morgan Emerging Markets’ Bond Index which increased by a weekly 0.44% to 783.79 points.

The yield on the Lebanese Eurobonds maturing in 5 years went up from last week’s 6.68% to 6.70% this week while the yield on the Lebanese Eurobonds maturing in 10 years slid from 7.16% to 7.12% over the same period.

US treasuries rallied over the past week as their offered yield is higher than the one seen in Europe or Japan. A very successful five year auction was also held Wednesday where demand was reported to have been the highest in over two years. Demand for safe haven assets was also strengthened by data showing a drop in pending home sales to a 10-months low in November.

As for the spread between the yields on the 5 Year and 10 Year Lebanese Eurobonds and their US comparable, it increased by a weekly 2.16% and 0.43% to 474 bps and 463 bps, respectively.

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

29/12/2016 22/12/2016
Lebanon 510 517
KSA 113 113
Dubai 148 148
Brazil 281 283
Turkey 273 274

 

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