Treasury yields up after Fed hiked interest rates for the fourth time in 2018

Lebanon’s BLOM Bond Index (BBI) rose over the last week by 3.17% to close at 88.67 points.  The yields on (5Y) and (10Y) Lebanese Eurobonds increased by 48 basis points (bps) to 11.68% and by 33 basis points (bps) to 11.61% respectively. 

As for the JP Morgan Emerging Markets’ Bond Index (EMBI), it recorded a weekly increase by 0.06% and reached 771.51 points.

In the US, the Fed hiked interest rates by 25 basis points to a new band of 2.25%-2.5%. The decision, while expected, was unwelcome news to the stock market who was affected negatively .In details, investors fled riskier assets and headed toward a safer investment as they have started to worry more about economic growth slowing. As a result, U.S. treasury yields on the 10-year and 5-Year Treasury dropped by 10 and 12 basis points (bps), ending this week at 2.65% and 2.79 %, respectively.

The 5Y and 10Y spreads between the yield on the Lebanese Eurobonds and its US comparable widened by 58 and 45 basis points (bps) to stand at 903 bps and 882 bps respectively.

Weekly Change of Lebanese Eurobonds Prices

  Prices Weekly Yields   Weekly
Maturity Coupon in % 12/20/2018 12/13/2018 Change 12/20/2018 12/13/2018 Change bps
3/9/2020 6.375 96.347 94.88 1.55% 9.60% 10.89% -128
4/14/2020 5.8 95.198 93.5 1.82% 9.76% 11.16% -139
6/19/2020 6.15 94.632 93.13 1.61% 10.10% 11.20% -110
4/12/2021 8.25 94.807 93.25 1.67% 10.84% 11.63% -79
10/4/2022 6.1 86.169 84.5 1.98% 10.62% 11.20% -58
1/27/2023 6 84.481 82.63 2.24% 10.78% 11.39% -62
4/22/2024 6.65 83.37 80.88 3.08% 10.83% 11.53% -70
11/4/2024 6.25 80.212 77.88 2.99% 10.90% 11.52% -63
12/3/2024 7.00 83.632 80.85 3.44% 10.80% 11.52% -73
2/26/2025 6.20 79.951 77 3.83% 10.71% 11.48% -77
6/12/2025 6.25 80.542 76.88 4.76% 10.46% 11.38% -92
11/28/2026 6.60 78.518 75.38 4.16% 10.68% 11.38% -71
3/23/2027 6.85 79.039 76 4.00% 10.74% 11.40% -66
11/29/2027 6.75 78.048 74.88 4.23% 10.61% 11.27% -67
11/3/2028 6.65 76.808 73.25 4.86% 10.47% 11.19% -71
2/26/2030 6.65 75.878 72 5.39% 10.34% 11.07% -73
4/22/2031 7.00 73 72.25 1.04% 11.06% 11.20% -14
3/23/2032 7.00 75.509 72.25 4.51% 10.45% 11.02% -57
11/2/2035 7.05 74.918 72 4.05% 10.19% 10.66% -46
3/23/2037 7.25 75.755 72 5.22% 10.20% 10.79% -59

 

 

Leave a Reply

Your email address will not be published. Required fields are marked *