Two Uncertainties in the US Market Boost Demand for US Treasuries

The BLOM Bond Index (BBI) rose by 1.8% over the past two weeks to reach 103.77 points, outpacing the JP Morgan Emerging Markets’ Bond Index which increased by a weekly 1.38% to 748.99 points.

As such, the yield on the Lebanese Eurobonds maturing in 5 years fell from 6.70% on 29/12/2016 to 6.18% this week. Similarly, the yield on the Lebanese Eurobonds maturing in 10 years slid from 7.12% to 6.83% over the same period.

In the US, demand on US treasuries accelerated over the past week especially as market uncertainty grew around Trump’s policy implementations post-Inauguration on January 20th. The yield on 10-year treasuries slipped to its lowest to 2.305% since Nov.30th as global investors sought safety in government bonds. The market remains in a cautious mood that awaits further details from the Fed on its next potential interest rate hikes.

As for the spread between the yields on the 5 Year and 10 Year Lebanese Eurobonds and their US comparable, it decreased by a weekly 43 bps and 16 bps to 431 bps and 447 bps, respectively.

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