US Treasury Yields Rise Steadily as Pro-European Macron Beat Le Pen in the French Presidential Election on May 7th

The BLOM Bond Index (BBI) fell by 0.28% in the past week to settle at 106.424 points on May 11, 2017. The Lebanese index was outpaced by the JP Morgan Emerging Markets’ Bond Index (EMBI), which rose by an incremental 0.06% to 780 points over the week.

Demand for Lebanese Eurobonds maturing in 5 and 10 years slipped over the past week as yields rose, respectively, from 5.4% and 6.49% on 04/05/2017 to 5.49% and 6.53%, respectively, on 11/05/2017.

In the USA, demand for treasuries was low this week as yields rose following Macron’s victory in the runoff to France’s Presidential Elections, which improved global sentiment. This trend was further strengthened by a larger than expected amount of new high-grade corporate bonds offered in the market on May 8th, promising higher yields to the investors. As such, yields on 5 year and 10 year treasuries climbed respectively, from 1.88% and 2.36% on 04/05/2017 to 1.93% and 2.39%, respectively, on 11/05/2017.

The 5 year and 10 year spread between the Lebanese Eurobonds’ yields and the US treasuries increased by 4 basis points (bps) and 1bps respectively, to stand at 356 bps and 414 bps on 11/05/2017.

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