Demand for US Treasuries Down on Expectations of a Hawkish Fed
Over the past week, the BLOM Bond Index (BBI) slipped by 1.27%, to end the week at 102.27 points. Likewise, the JP Morgan Emerging Markets’ Bond Index (EMBI) also fell by 0.89%, to end the week at 800.13 points.
Demand was down on the Lebanese Eurobonds maturing in 5 and 10 years as their yields rose from 6.10% and 6.97% to 6.35% and 7.20%, respectively.
Yields were also up in the US as investors anticipate that the upcoming Fed chair will be in favour of a more restrictive monetary policy. Yields on the US treasuries maturing in 5 and 10 years grew from 1.98% and 2.33% last week to 2.07% and 2.46% this week, respectively.
The 5Y spread between the Lebanese Eurobonds and their US comparables rose from last week’s 412 bps and 464 bps to 428 bps and 474 bps, respectively.
5 Year Credit Default Swaps, Mid-Prices (in basis points)
| 26/10/2017 | 19/10/2017 | |
| Lebanon | 478 | 456 |
| KSA | 83 | 84 |
| Dubai | 145 | 147 |
| Brazil | 177 | 171 |
| Turkey | 192 | 172 |
Weekly Change of Lebanese Eurobonds Prices
| Prices | Weekly | Yields | Weekly | ||||
| Maturity | Coupon in % | 26/10/2017 | 19/10/2017 | Change | 26/10/2017 | 19/10/2017 | Change bps |
| 23/04/2019 | 5.5 | 100.25 | 100.63 | -0.38% | 5.32% | 5.06% | 26 |
| 20/05/2019 | 6 | 101 | 101.38 | -0.37% | 5.32% | 5.08% | 24 |
| 28/11/2019 | 5.45 | 100 | 100.5 | -0.50% | 5.45% | 5.19% | 25 |
| 09/03/2020 | 6.375 | 101.5 | 101.75 | -0.25% | 5.69% | 5.58% | 11 |
| 14/04/2020 | 5.8 | 99.88 | 100.25 | -0.37% | 5.85% | 5.69% | 16 |
| 19/06/2020 | 6.15 | 100.63 | 101 | -0.37% | 5.89% | 5.74% | 15 |
| 12/04/2021 | 8.25 | 106 | 107.25 | -1.17% | 6.29% | 5.91% | 38 |
| 04/10/2022 | 6.1 | 99.13 | 100.13 | -1.00% | 6.31% | 6.07% | 24 |
| 27/01/2023 | 6 | 97.38 | 98.63 | -1.27% | 6.60% | 6.31% | 29 |
| 22/04/2024 | 6.65 | 98.63 | 100 | -1.37% | 6.92% | 6.65% | 27 |
| 04/11/2024 | 6.25 | 96.25 | 97.75 | -1.53% | 6.93% | 6.65% | 28 |
| 03/12/2024 | 7.00 | 100.25 | 101.75 | -1.47% | 6.95% | 6.69% | 27 |
| 26/02/2025 | 6.20 | 95.13 | 97 | -1.93% | 7.06% | 6.72% | 34 |
| 12/06/2025 | 6.25 | 95.13 | 96.88 | -1.81% | 7.09% | 6.78% | 31 |
| 28/11/2026 | 6.60 | 96.25 | 97.75 | -1.53% | 7.17% | 6.94% | 23 |
| 23/03/2027 | 6.85 | 97.63 | 99.25 | -1.63% | 7.20% | 6.96% | 24 |
| 29/11/2027 | 6.75 | 96.75 | 98.38 | -1.66% | 7.21% | 6.97% | 23 |
| 03/11/2028 | 6.65 | 94.5 | 96.63 | -2.20% | 7.39% | 7.09% | 29 |
| 26/02/2030 | 6.65 | 94 | 96 | -2.08% | 7.40% | 7.14% | 26 |
| 22/04/2031 | 7.00 | 96.25 | 98 | -1.79% | 7.45% | 7.23% | 21 |
| 23/03/2032 | 7.00 | 95 | 97 | -2.06% | 7.57% | 7.34% | 24 |
| 02/11/2035 | 7.05 | 95 | 96.5 | -1.55% | 7.56% | 7.40% | 16 |
| 23/03/2037 | 7.25 | 94.5 | 96.75 | -2.33% | 7.80% | 7.57% | 23 |
