US Treasury Yields Up on Potential Interest Rate Hikes
| 02/02/2017 | 24/02/2017 | Change | Year to Date | ||
| BLOM Bond Index (BBI)* | 104.99 | 104.98 | 0.01% | 3.03% | |
| Weighted Yield** | 5.91% | 5.93% | -0.34% | -11% | |
| Weighted Spread*** | 431 | 449 | -4.01% | -17% |
| 02/03/2017 | 24/02/2017 | Weekly Change | |
| BBI | 104.99 | 104.98 | 0.01% |
| JP Morgan EMBI | 762.82 | 764.12 | -0.17% |
| 5Y LEB | 5.76% | 5.80% | -4 |
| 10Y LEB | 6.72% | 6.69% | 3 |
| 5Y US | 2.03% | 1.87% | 16 |
| 10Y US | 2.45% | 2.38% | 7 |
| 5Y SPREAD | 373 | 393 | -20 |
| 10Y SPREAD | 427 | 431 | -4 |
The BLOM Bond Index (BBI) marginally rose by a weekly 0.01% to reach 104.99 points; nonetheless, it outperformed the JP Morgan Emerging Markets’ Bond Index which fell by a weekly 0.17% to 762.82 points.
Demand for Lebanese Eurobonds maturing in 5 years grew this week while that of 10 years dropped. As such, the 5Y yields fell from 5.80% to 5.76% while the 10Y yields rose from 6.69% to 6.72%.
Moreover, demand for US treasuries maturing in 5 years and 10 years plunged during the week with their yields increasing from 1.87% and 2.38% to 2.03% and 2.45%, respectively. Yields on US treasuries rose after the Fed’s Governor Jerome Powell indicated that the March interest rate hike is mostly confirmed. Moreover, the governor hinted that it is highly possible to have three rate hikes in 2017.
The 5 year and 10 year spread between the Lebanese Eurobonds’ yields and the US treasuries narrowed by 20 bps and 4 bps to stand at 373 bps and 427 bps, respectively.
5 Year Credit Default Swaps, Mid-Prices (in basis points)
| 02/03/2017 | 24/02/2017 | |
| Lebanon | 414 | 426 |
| KSA | 94 | 98 |
| Dubai | 116 | 117 |
| Brazil | 224 | 220 |
| Turkey | 244 | 236 |
Weekly Changes in Eurobonds’ Prices and Yields
| Prices | Weekly | Yields | Weekly | ||||
| Maturity | Coupon in % | 02/02/2017 | 24/02/2017 | Change | 02/02/2017 | 24/02/2017 | Change bps |
| 12/06/2018 | 5.15 | 101 | 101 | 0.00% | 4.34% | 4.35% | -2 |
| 12/11/2018 | 5.15 | 101.13 | 101.15 | -0.02% | 4.45% | 4.45% | 0 |
| 23/04/2019 | 5.5 | 101.25 | 101.13 | 0.12% | 4.88% | 4.95% | -7 |
| 20/05/2019 | 6 | 102.25 | 102.13 | 0.12% | 4.92% | 4.99% | -7 |
| 28/11/2019 | 5.45 | 101.13 | 100.75 | 0.38% | 5.00% | 5.16% | -15 |
| 09/03/2020 | 6.375 | 103 | 102.75 | 0.24% | 5.29% | 5.39% | -10 |
| 14/04/2020 | 5.8 | 101.25 | 101.13 | 0.12% | 5.36% | 5.41% | -4 |
| 19/06/2020 | 6.15 | 102.13 | 102 | 0.13% | 5.44% | 5.49% | -5 |
| 12/04/2021 | 8.25 | 109.5 | 109.63 | -0.12% | 5.63% | 5.61% | 2 |
| 04/10/2022 | 6.1 | 100.75 | 100.38 | 0.37% | 5.94% | 6.02% | -8 |
| 27/01/2023 | 6 | 99.75 | 99.5 | 0.25% | 6.06% | 6.11% | -5 |
| 22/04/2024 | 6.65 | 101 | 101 | 0.00% | 6.48% | 6.48% | 0 |
| 04/11/2024 | 6.25 | 98.5 | 98.5 | 0.00% | 6.51% | 6.51% | 0 |
| 03/12/2024 | 7.00 | 102.75 | 102.88 | -0.13% | 6.57% | 6.55% | 2 |
| 26/02/2025 | 6.20 | 97.75 | 98 | -0.26% | 6.57% | 6.53% | 4 |
| 12/06/2025 | 6.25 | 97.75 | 98 | -0.26% | 6.61% | 6.57% | 4 |
| 28/11/2026 | 6.60 | 99.13 | 99.38 | -0.25% | 6.73% | 6.69% | 4 |
| 29/11/2027 | 6.75 | 99.5 | 100 | -0.50% | 6.82% | 6.75% | 7 |
| 03/11/2028 | 6.65 | 98.25 | 98.63 | -0.39% | 6.88% | 6.83% | 5 |
| 26/02/2030 | 6.65 | 98.13 | 98.13 | 0.00% | 6.87% | 6.87% | 0 |
| 22/04/2031 | 7.00 | 99.5 | 99.75 | -0.25% | 7.08% | 7.05% | 3 |
| 02/11/2035 | 7.05 | 99.25 | 99.25 | 0.00% | 7.13% | 7.13% | 0 |
