Amid concerns over money laundering and terrorist financing, Lebanon jewelry sector has come under scrutiny as it operates within the cash economy. BDL has raised alarms about the matter, particularly in ongoing discussions with American officials to curb such violations. Acting BDL Governor Wassim Manssouri has initiated preparations for a meeting with jewelry merchants and shop owners, educating them about techniques to contribute to combatiing money laundering and terrorist financing.

The BLOM Bond Index (BBI) which is BLOMInvest Bank’s market value-weighted index tracking the performance of the Lebanese government Eurobond’s market (excluding coupon payments), increased throughout the course of the week by 0.28%, to reach 6.05 points by March 14, 2024. As for the JP Morgan EMBI, it dropped by 0.37% to stand at 849.73 on March 14, 2024 compared to 852.9 on March 7, 2024.

Moreover, the yield on the five-year (5Y) Lebanese Eurobonds dropped by 20 bps to stand at 107.2%, meanwhile the yield on the ten year (10Y) Lebanese Eurobonds increased by 20 bps to stand at 105.8% by the week ending March 14, 2024 compared to the previous week.

US yield curve shifted higher over the course of the week as one, five and ten years yields increased respectively by 11, 22 and 20 bps to stand at 5.04%, 4.29% and 4.29% by March 14, 2024 compared to the previous week.

US inflation reached 3.2% in the month of February 2024, exceeding forecasts for the second consecutive month.  In fact, prices paid to US producers rose in February by the most in six months, driven by higher fuel and food costs that add to evidence inflation remains elevated. While investors have been scrutinizing the path of inflation as they try to anticipate when the Federal Reserve will begin to cut interest rates. New inflation data reaffirms expectations that the Fed will be in no rush to reduce interest rates. Fed Chair Jerome Powell reiterated that the central bank wants to be more confident that inflation is returning to its 2% target. As such, in their meeting next week, Fed officials are expected to keep their benchmark rate unchanged.

In bond markets, the yield on the benchmark 10-year U.S. Treasury note jumped to 4.29% on Thursday from 4.19% the previous day, its largest one-day gain in a month. Analysts say yields have climbed this week partly because of concerns that the hot inflation data could lead Fed officials to signal fewer rate cuts this year.

Furthermore, US Jobless claims dropped by 1,000 to reach 209,000 by the end of week of March 9, as per the US Department of Labor. Continuing claims, on the other hand, jumped by 17,000 to reach 1.79 million by end of week March 2 compared to the previous week. Indeed, the continuing claims have risen steadily since last year in a sign that it’s taking longer for people to find new jobs. The revised data for continued claims are consistent with a job market that is showing some signs of loosening but is still relatively strong. Massachusetts saw the largest drop in initial claims for the week ended March 2 at 3,894, followed by Rhode Island and Oregon. The biggest increase was in New York, where claims jumped by 14,176, followed by California and Texas, according to the Labor Department.

In turn, the 5Y spread between the yield on Lebanese Eurobonds and their US comparable recorded a downturn from 10,333 to 10,291 bps. Meanwhile, the 10Y spread between the yield on Lebanese Eurobonds and their US comparable remained unchanged at 10,151 bps by the week ending March 14, 2024.

Weekly Change of Lebanese Eurobonds Prices 

Source: BLOMInvest Bank

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