U.S. 10-year Treasury Yield Slightly Increased This Week, Amid Expected Target Interest Rate Surge in March

03/02/202227/01/2022 ChangeYear to Date
BLOM Bond Index (BBI)11.6911.164.75%6.64%
Weighted Yield          85.33%87.94%-2.98%-2.84%
Weighted Spread             8,482              8,751-3.07%-3.35%

 03/02/202227/01/2022 Change
JP Morgan EMBI894.83892.930.21%
5Y LEB81.55%84.00%-245
10Y LEB63.97%67.00%-303
5Y US1.66%1.66%0
10Y US1.82%1.81%1
5Y SPREAD                      7,989                        8,234-245
10Y SPREAD                      6,215                        6,519-304

Lebanon witnessed a continuous improvement in its local currency; the Lebanese pound stood somehow stable at USD/LBP 22,000 – 22,500 all week long. Exchange rate dropped below Sayrafa rate USD/LBP 21,200 beginning of week, then managed to slightly exceed it by Thursday.

In details, Prime Minister Najib Mikati met with President Michel Aoun at Baabda Palace earlier today to discuss the state of the proposed budget for year 2022, as well as to hold a cabinet session next Thursday. Prime Minster explained that the electricity advance will be outside the budget sent as they seek to have one comprehensive plan for the electricity sector.

Amid these developments, 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), rose by 4.75% to stand at 11.69 points by the week ending February 3, 2022 compared to the week of January 27, 2022. In addition, the YTD change has finished at 6.64% at end of February 3, 2022. Meanwhile, the JP Morgan EMBI increased from 892.93 to 894.83 during the period.

In addition, the yield on the 5 years (5Y) and 10 years (10Y) Lebanese Eurobonds dropped by 245 and 303 basis points (bps), respectively, to end the week of February 3, 2022 at 81.55% and 63.97%.

In the US, the yields on 5-year treasuries stayed the same, recorded at 1.66% and 10-year US treasuries increased by 1 basis point (bp), from 1.81% to 1.82% by the week ending February 3, 2022.

This week, U.S. jobless claims decline further as Omicron wave moderates. The number of new claims for unemployment benefits fell more than expected last week.

Importantly, Federal Reserve Bank of Richmond President Thomas Barkin said that in general he feels the federal funds rate should be increased to where it was just before the pandemic — at the end of 2019 it was set in a range between 1.5 and 1.75. Moreover, the Fed is expected to raise the target interest rate by a quarter of a percentage point at its March meeting from the current near zero level, and provide some guidance on how it intends to proceed from there.

In turn, the 5Y and 10Y spread between the yield on Lebanese Eurobonds and their US comparable recorded a drop from 8,234 bps and 6,519 to 7,989 bps and 6,215 bps, respectively.

5Y Credit Default Swaps (CDS)
Lebanon . .
 Source: Bloomberg


Weekly Change of Lebanese Eurobonds Prices 

Maturity Coupon in %03/02/202227/01/2022Change 03/02/202227/01/2022Change bps


Source: BLOMInvest Bank

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