US jobless claims reached the highest figure of 249,000 since August of last year

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 2.28%, to reach 6.17 points by August 1, 2024. Meanwhile, JP Morgan EMBI rose by 0.98% to stand at 882.39 points on August 1, 2024 compared to 873.86 points on July 25, 2024.

The yield on the five-year (5Y) and ten year (10Y) Lebanese Eurobonds rose respectively by 200 and 265 bps to stand at 107.1% and 103.9% by the week ending August 1, 2024 compared to the previous week.

US yield curve remained shifted lower over the course of the week as five and ten years’ yields dropped by 29 and 28 bps to stand at 3.84% and 3.99% respectively on August 1, 2024 compared to the previous week.

The number of Americans filing for unemployment benefits jumped to its highest level in a year last week, even as the labor market remains surprisingly healthy in an era of high interest rates. In more details, Jobless claims for the week ending July 27 climbed by 14,000 to 249,000, from 235,000 the previous week, as per the Labor Department. It’s the most since the first week of August last year and the 10th straight week that claims have come in above 220,000. Furthermore, continuing claims have been on the rise in recent months, suggesting that some Americans receiving unemployment benefits are finding it more challenging to land jobs.

Weekly unemployment claims are widely considered as representative of layoffs, and though they have been slightly higher the past couple of months, they remain at historically healthy levels. In June, the US unemployment rate ticked up to 4.1% although America’s employers have added 206,000 jobs in the same month.

Strong consumer demand and a resilient labor market has helped to avert a recession that many economists forecast during the extended period of rate hikes by the Federal Reserve that began in March of 2022. Indeed, as inflation continues to ease reaching 3% in June, the Fed’s goal of a soft-landing, bringing down inflation without causing a recession and mass layoffs, appears within reach. On Wednesday, the Fed left its benchmark rate alone, but officials hinted strongly that a cut could come in September if the data remained on its recent trajectory.

In turn, the 5Y and 10Y spread between the yield on Lebanese Eurobonds and their US comparable recorded an upturn from 10,097 and 9,698 bps to 10,326 and 9,991 bps respectively by the week ending August, 2024 compared to the previous week.

Weekly Change of Lebanese Eurobonds Prices 

Source: BLOMInvest Bank

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