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 1.38%, to reach 6.15 points by July 4^th, 2024. Similarly, JP Morgan EMBI dropped slightly by 0.21% to stand at 864.79 points on July 4^th, 2024 compared to 866.6 points on June 27^th, 2024.

The yield on the five-year (5Y) and ten year (10Y) Lebanese Eurobonds rose respectively by 145 bps and 160 bps to stand at 107.05% and 103.6% by the week ending July 4^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 4 and 7 bps to both stand at 4.33% and 4.36% on July 4^th, 2024 compared to the previous week.

Continuing US jobless claims rose for a ninth straight week in the longest stretch since 2018, indicating a growing number of people are having difficulty finding a new job. In more details, continuing claims, a proxy for the number of people receiving benefits, increased to 1.86 million in the week ending June 22, the highest since November 2021, according to the Labor Department data.

US jobless claims increased by 4k over the course of the week to stand at 238,000 by July 4th, 2024, the highest level since August. Thus, the level of jobless claims points to more limited demand for labor as the economy slows under the weight of higher borrowing costs. Nonetheless, the data for Weekly US jobless claims tend to be volatile, especially around holidays on the 4th of July.

There are scattered signs that companies are paring headcounts due to cost-cutting and softer economic conditions. US-based employers announced 48,786 job cuts in June, according to Challenger, Gray & Christmas Inc. that’s the highest number of job-cut announcements since 2009, excluding the year 2020, the height of the pandemic. As such, Bloomberg Economics projects the unemployment rate will reach 4.5% by year end, a jump from the current level of 4%.

Federal Reserve officials said they were awaiting additional evidence that inflation is cooling and were divided on how long to keep interest rates elevated at their last policy meeting. Indeed, the Fed has held its key policy rate in a target range of 5.25% to 5.5% — the highest level in more than two decades, since last July. Nonetheless, according to FOMC meeting that ended on June 12, officials dialed back the number of interest-rate cuts they see this year to just one, according to the median projection. In more details, four policymakers suggested there would be no cuts for 2024, while eight officials forecast two interest rate cuts. Indeed, some officials underscore the need for patience while others emphasized a further weakening in demand could generate a larger increase in unemployment.

In turn, the 5Y and 10Y spread between the yield on Lebanese Eurobonds and their US comparable recorded respectively an upturn from 10,131 and 9,771 bps to 10,272 and 9,924 bps by the week ending July 4^th, 2024 compared to the previous week.

 Weekly Change of Lebanese Eurobonds Prices 

Source: BLOMInvest Bank

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