US Yield Curve Shifts Upward Following This Week’s Strong Economic Data

18/04/202409/04/2024 ChangeYear to Date
BLOM Bond Index (BBI)5.775.99-3.58%-4.28%
Weighted Yield          222.37%212.12%4.83%153.21%
Weighted Spread    21,693   20,6734.93%147.19%


18/04/202409/04/2024 Change
JP Morgan EMBI842.55860.07-2.04%
5Y LEB111.20%108.25%295
10Y LEB110.25%106.60%365
5Y US4.68%4.37%31
10Y US4.64%4.36%28
5Y SPREAD                   10,652                     10,388264
10Y SPREAD                   10,561                     10,224337


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), decreased throughout the course of the week by 3.58%, to reach 5.77 points by April 18th, 2024. The major decrease was witnessed on April 15th and April 16th following Iran’s attack on Israel.

As for the JP Morgan EMBI, it dropped by 2.04% to stand at 842.55 on April 18th, 2024 compared to 860.07 on April 09th, 2024. Hence, a higher yield curve.

Moreover, the yield on the five-year (5Y) Lebanese Eurobonds rose by 295 bps to stand at 111.2%, similarly the yield on the ten year (10Y) Lebanese Eurobonds increased by 365 bps to stand at 110.25% by the week ending April 18th, 2024 compared to the previous week.


US yield curve shifted higher over the course of the week as five and ten years yields rose respectively by 31 and 28 bps to stand at 4.68% and 4.64% by April 18th, 2024 compared to the previous week.


US annual inflation rate revealed on April 10th, 2024 rose for the second consecutive month from 3.4% in February to 3.5% in March and exceeded the forecasts of 3.4%. In details, energy costs, transportation costs, shelter, and food costs increased by 2.1%, 10.7%, 5.7% and 2.2% respectively.


Several Economic Data revealed this month showing that US economy is still resilient. On Monday, US retail sales announcement revealed a rise in retail sales by 0.7% in March compared to February and exceeded the expectation of 0.3% in which major increases were seen in sales at non-store retailers (2.7%) and gasoline stations (2.1%).

In addition, US unemployment rate revealed on April 5th for March experienced a decrease to 3.8% from 3.9% in February. Afterwards, on Thursday April 18th, several data regarding employment was revealed by the US Department of Labor. The number of people claiming unemployment benefits remained unchanged for the week ending April 18th at 212,000 below market expectation of 215,000. Moreover, the 4-week moving average for initial jobless claims remained unchanged at 214,500. Furthermore, continuing jobless claims, being the number of people receiving unemployment benefits, increased to 1,812,000.

As such, earlier in the week, Federal Reserve Chair Jerome Powell stated that the central bank is not in hurry to cut borrowing costs. Therefore, market expectations is that the US Central Bank might not cut interest rates before September and a minority expects that there will be no rate cuts in 2024.

In turn, the 5Y and 10Y spread between the yield on Lebanese Eurobonds and their US comparable recorded an upturn from 10,388 and 10,224 bps to 10,652 and 10,561 bps by the week ending April 18th, 2024.


5Y Credit Default Swaps (CDS)
 Source: Bloomberg


Weekly Change of Lebanese Eurobonds Prices 

Maturity Coupon in %18/04/202409/04/2024Change 18/04/202409/04/2024Change bps

Source: BLOMInvest Bank





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