Volatility on US Treasury Market in Light with Higher Investors’ Concerns.
Lebanon’s BLOM Bond Index (BBI) this week declined by 0.53% to close at 89.47 points, due to a lower demand for 5Y and 10Y Lebanese Eurobonds. The JP Morgan Emerging Markets’ Bond Index (EMBI) witnessed also a 0.49% weekly decrease to stand at 765.97 points. As such, the yields on the (5Y) and (10Y) Lebanese Eurobonds increased by 40 and 10 basis points (bps) to reach 10.30% and 10.20% respectively.
In the US , the treasury market witnessed volatility during the week and the yields on the 5Y and 10Y treasuries witnessed a downtick of 5 and 3 basis points (bps) each, ending the week at 2.98% and 3.14%, respectively. In fact, fears that interest rates will be too high, trade concerns between US and China and the global economy, have led to a decrease in equities’ prices as the S&P dropped 3.1% on Wednesday pushing higher demand for Government bonds and decline in 5Y and 10Y treasuries yields demand which stood at 2.94% and 3.10%, respectively
Against these bond market developments over the week, the 5Y and 10Y spread between the yield on the Lebanese Eurobonds and their US counterparts narrowed by 44 and 50 bps to settle at 732 and 706 bps, respectively.
5 Year Credit Default Swaps, Mid-Prices (in basis points)
| 25/10/2018 | 18/10/2018 | |
| Lebanon | 705 | 678 |
| KSA | 96 | 100 |
| Dubai | 123 | 128 |
| Brazil | 212 | 220 |
| Turkey | 358 | 392 |
Weekly Change of Lebanese Eurobonds Prices
| Prices | Weekly | Yields | Weekly | ||||
| Maturity | Coupon in % | 25/10/2018 | 18/10/2018 | Change | 25/10/2018 | 18/10/2018 | Change bps |
| 28/11/2019 | 5.45 | 96.38 | 96.25 | 0.14% | 9.00% | 9.06% | -6 |
| 09/03/2020 | 6.375 | 96.25 | 96.25 | 0.00% | 9.34% | 9.30% | 4 |
| 14/04/2020 | 5.8 | 94.75 | 94.88 | -0.14% | 9.72% | 9.57% | 15 |
| 19/06/2020 | 6.15 | 94.5 | 94.63 | -0.14% | 9.83% | 9.70% | 13 |
| 12/04/2021 | 8.25 | 95.75 | 96.13 | -0.40% | 10.24% | 10.05% | 19 |
| 04/10/2022 | 6.1 | 87 | 87.38 | -0.43% | 10.18% | 10.04% | 14 |
| 27/01/2023 | 6 | 86 | 86.25 | -0.29% | 10.13% | 10.03% | 10 |
| 22/04/2024 | 6.65 | 85 | 85.5 | -0.58% | 10.29% | 10.15% | 14 |
| 04/11/2024 | 6.25 | 82.13 | 82.88 | -0.90% | 10.30% | 10.10% | 20 |
| 03/12/2024 | 7.00 | 85.25 | 86 | -0.87% | 10.31% | 10.12% | 19 |
| 26/02/2025 | 6.20 | 81.38 | 82.25 | -1.06% | 10.27% | 10.04% | 23 |
| 12/06/2025 | 6.25 | 81.13 | 81.88 | -0.92% | 10.24% | 10.05% | 19 |
| 28/11/2026 | 6.60 | 80.5 | 81.25 | -0.92% | 10.19% | 10.03% | 16 |
| 23/03/2027 | 6.85 | 81 | 81.63 | -0.77% | 10.28% | 10.14% | 14 |
| 29/11/2027 | 6.75 | 80 | 80.5 | -0.62% | 10.17% | 10.07% | 10 |
| 03/11/2028 | 6.65 | 78.88 | 79 | -0.15% | 10.04% | 10.01% | 3 |
| 26/02/2030 | 6.65 | 77.25 | 77.88 | -0.81% | 10.06% | 9.94% | 12 |
| 22/04/2031 | 7.00 | 77.63 | 78.38 | -0.96% | 10.21% | 10.08% | 13 |
| 23/03/2032 | 7.00 | 77.5 | 78.25 | -0.96% | 10.10% | 9.97% | 13 |
| 02/11/2035 | 7.05 | 77.25 | 78 | -0.96% | 9.83% | 9.72% | 11 |
| 23/03/2037 | 7.25 | 77.88 | 78.63 | -0.95% | 9.88% | 9.77% | 11 |
