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 0.47%, to reach 6.39 points by June 6^th, 2024. Additionally, JP Morgan EMBI rose by 0.75% to stand at 863.74 on June 6^th, 2024 compared to 857.3 on May 30^th, 2024.

The yield on the five-year (5Y) and ten year (10Y) Lebanese Eurobonds dropped respectively by 55 and 45 bps to stand at 103% and 100% by the week ending June 6^th, 2024 compared to the previous week.

US yield curve shifted lower over the course of the week as five and ten years (10Y) yields dropped respectively by 28 and 27 bps to stand at 4.29% and 4.28% on June 6^th compared to the previous week.

Initial claims for unemployment insurance for the week ending June 1^st increased by 8,000 to stand at 229k (vs. an upwardly revised 221k prior) – above the consensus forecast (220k), but close to Bloomberg estimate of 230k. Indeed, according to the US Government data on Friday, the US economy added 185,000 jobs last month, which would mark an acceleration from April’s 175,000 gain, according to a Bloomberg-compiled consensus. Moreover, a separate report from Challenger, Gray & Christmas showed that layoffs declined 1.5% on a sequential basis in May.

Furthermore, continuing claims rose by 2,000 to reach 1.79 million for the week ending May 25^th, almost in line with the Bloomberg consensus. Despite the week-over-week increase in continuing claims, the labor market remains tight, as continuing claims are still very low by any historical standard. Indeed, economists believe that the data is supporting the notion that people who lose a job are able to find a new one with relative ease.

The Federal Reserve will potentially cut interest rates up to two times this year as long as inflation data moves in the right direction because they also worry about the risk of financial accidents like SVB affair in 2023. In more details, The June FOMC meeting (June 11-12) will probably be the most pivotal in 2024. Nonetheless, economists believe that a cut in July seems unlikely and the Fed will probably avoid a November cut because of the presidential election. That leaves September and December.

In turn, the 5Y and 10Y spread between the yield on Lebanese Eurobonds and their US comparable recorded respectively a downturn from 9,898 and 9,590 bps to 9,871 and 9,572 bps by the week ending June 6^th, 2024 compared to the previous week.

Weekly Change of Lebanese Eurobonds Prices 

Source: BLOMInvest Bank

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