US Bond Yields Slightly Up amid Fed’s decision to keep interest intact

This week, political hope has become off-track after the resignation of PM Saad Hariri. hundreds have takien to the streets and blocked major roads in Beirut city. In turn, France and U.S. called on Lebanese leaders to urgently form a new government and they planned an international conference to support the effort. In fact, earlier this week, French Minister claimed that Paris may soon impose sanctions on Lebanese politicians blocking the formation of a new government. As for the Eurobonds market, it continues to be stagnant following the political situation in the country.

As such, the BLOM Bond Index (BBI) which is BLOMInvest Bank’s market value-weighted index tracking the performance of the Lebanese government Eurobonds’ market (excluding coupon payments), decreased by 1.14%  to stand at 13.03 points by the week ending July 15, 2021 compared to the week of July 08, 2021. Meanwhile, the JP Morgan EMBI slightly progressed from 927.70 to 928.72 during the period.

In addition, the yields on the 5 year (5Y) and 10 year (10Y) Lebanese Eurobonds increased by 90 and 55 basis points (bps) to end the period at 74.90% and 57.75%, respectively.

In the US, the yields on 5 year and 10 year US treasuries recorded a slight increase from the week ending July 08, 2021 from 0.74% and 1.30% to 0.78% and 1.31 %,respectively, by the end of week 15 July, 2021.

In details, the US treasury market was affected by the Fed’s view regarding inflation that is likely transitory. In fact, many analysts anticipate a further rise in bond yields market as a further rebound in economic keeps fears about inflation and could force the Fed to move too fast to tighten policy, slowing down the economy as a result. However, the spread of the Delta variant could be also a key threat for the upcoming period, with COVID-19 new cases are on the rise again at the global level.

In turn, the 5Y and 10Y spread between the yield on Lebanese Eurobonds and their US comparable narrowed from 7,326 bps and 5,590 bps to 7,412 bps and 5,644 respectively.


Lebanon . .


Weekly Change of Lebanese Eurobonds Prices


Maturity Coupon in %15/07/202108/07/2021Change 15/07/202108/07/2021Change bps

Source: BLOMInvest Bank

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