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), slightly increased throughout the course of the week by 1.23%, to reach 5.86 points by May 9^th, 2024. Similarly, JP Morgan EMBI rose by 1.32% to stand at 857.17 on May 9^th, 2024 compared to 845.98 on May 2^nd, 2024.

Moreover, the yield on the five-year (5Y) and ten year (10Y) Lebanese Eurobonds fell respectively by 30 and 135 bps to stand at 110.5% and 108.4% by the week ending May 9^th, 2024 compared to the previous week.

US yield curve shifted lower over the course of the week as one, five and ten years yield decreased respectively by 4, 10 and 13 bps on May 9^th compared to the previous week.

On Friday May 3^rd, U.S. Bureau of Labor Statistics revealed that unemployment rate in the United States rose from 3.8% in March 2024 to 3.9% in April 2024 contrary to market expectation that it will remain constant at 3.8%. Moreover, number of unemployed individuals rose by 63,000 and settled at 6.49 million.

Later on, on Thursday May 9^th, several figures regarding jobless claims were revealed by U.S. Department of Labor.

First, the number of people claiming unemployment benefits in the US increased by 22K to reach the highest since August 2023 and settled at 231K on the week ending May 4^th, above market expectations of 210K. The four consecutive initial jobless claims decrease streak was ceased by an increase of 22K in the week ending May 4^th. This increase is supporting the Federal Reserve to foresee the gradual loosening of the monetary policy.

Second, US’s continuous jobless claims increased to reach 1.785 million in the week ending April 27^th, 2024 and below the market forecasts of 1.79 million.

Third, US’s 4-week moving average for initial jobless claims that dismisses week-to-week volatility reached its highest level in three months and reached 215K in the week ending May 4^th.

Following the above mentioned unexpected figures, the Fed presidents of Boston, Richmond, New York, and Minneapolis suggested keeping the current interest rates until there is greater confidence that inflation is moving sustainably towards 2%.

During its May’s meeting, the Federal Reserve maintained the interest rates unchanged at 5.25%-5.5% since it seems that bringing the inflation rate down to the 2% target might not be reached this year due to the ongoing inflationary pressures and tight labor market. However, Federal Reserve Chair Jerome Powell declared that he doesn’t expect a hike in inflation but on the contrary he believes that the existing policy is sufficiently restrictive to reach the targeted 2% inflation rate.

In turn, the 5Y and 10Y spread between the yield on Lebanese Eurobonds and their US comparable recorded a downturn from 10,623 and 10,517 bps to 10,603 and 10,395 bps respectively by the week ending May 9^th, 2024.

Weekly Change of Lebanese Eurobonds Prices 

Source: BLOMInvest Bank

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