Trading in Lebanese eurobonds was no more active in the very early New Year than it was in 2000, as the market displayed its usual illiquid characteristics. Attention, as with most other markets, was focused on the US Federal Reserve’s half-a-percent cut in the federal funds rate, its affect on U.S. Treasuries and yield spreads with local eurobonds. The latter are expected to widen in the near-term, increasing the attraction of Lebanese eurobonds, at which point demand may see their prices rise and yields decline.
The Fed’s move will put downward pressure on dollar rates elsewhere. U.S. Treasuries recovered from the tumble that followed the Fed’s surprise rate move, as stocks surged on Wednesday, January 3, with players still expecting further monetary easing.
The December jobs report came-in in-line with expectations, but the weekly jobless claims report showed first-time unemployment claims ended December 30th rose to a two-and-a-half year high. At the same time, fears of cash-strapped California power utilities facing possible bankruptcy sent investors into the safe-haven of Treasuries. — ( Banque du Liban et d'Outre-Mer Sal )
© 2001 Mena Report (www.menareport.com)
