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 decreased throughout the course of the week by 1.59%, to reach 6.23 points by June 27^th, 2024. Similarly, JP Morgan EMBI dropped slightly by 0.09% to stand at 866.6 points on June 27^th, 2024 compared to 867.41 points on June 20^th, 2024.

The yield on the five-year (5Y) and ten year (10Y) Lebanese Eurobonds rose respectively by 160 bps and 140 bps to stand at 105.6% and 102% by the week ending June 27^th, 2024 compared to the previous week.

US yield curve shifted upward over the course of the week as five, and ten years (10Y) yields rose respectively by 3 bps and 4 bps to both stand at 4.29% on June 27^th, 2024 compared to the previous week.

The first debate between the current US president Joe Biden and his predecessor Donald Trump revealed Trump as a stronger candidate ahead of the 2024 elections. Investors consider that the arrival of Donald Trump to the White House implies lower corporate taxes, improving stocks prices and bond yields. Moreover, investors are waiting US Personal Consumption Expenditures (PCE) inflation data that is going to be released today. In case the data showed stronger than expected inflationary data, this will encourage Federal Reserve to keep the restrictive policies, noting that one Fed official Michelle Bowman implied that the willingness to hike rates again should progress on inflation stall or even increase again.

Additionally, the US Bureau of Economic Analysis revealed the quarter-on-quarter final GDP growth rate showed an expansion of the US economy expanded 1.4% in the first quarter of 2024.

In addition, Thursday’s data from Department of Labor pressured the US bond yields. First, initial jobless claims decreased by 6,000 from prior week and reached 233,000 for the period ending June 22^nd, 2024; and were below the expectations of 236,000. Moreover, continuing jobless claims rose by 18,000 to record 1,839,000 for the week ending June 15^th, 2024, implying that unemployed people are facing difficulties in finding jobs. Furthermore, the four-week moving average for initial jobless claims that dismiss week-to-week volatility increased by 3,000 to record 236K in June 22^nd, 2024.

In turn, the 5Y and 10Y spread between the yield on Lebanese Eurobonds and their US comparable recorded respectively an upturn from 9,974 bps and 9,635 bps to 10,131 bps and 9,771 bps by the week ending June 27^th, 2024 compared to the previous week.

Weekly Change of Lebanese Eurobonds Prices 

Source: BLOMInvest Bank

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