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Anita Yadav - Head of Fixed Income Research
Published Date: 05 May 2019
Last month, the Federal Reserve reiterated its neutral stance on monetary policy and was reasonably cautious in its commentary. While interest rates were left unchanged at the FOMC meeting on 30 April, the Fed revised down the interest paid on excess reserves (IOER) by 5bps to 2.35% which was seen as slightly more dovish than previous perceptions. Nevertheless, strong jobs data and Fed Chairman Powell’s comment that the muted inflation was caused by temporary factors were perceived as hawkish thereby causing marginal increase in yields on US Treasuries. Yields on 2yr, 5yr and 10yrs US treasuries closed the month of April at 2.33% (unchanged, m/m), 2.32% (unchanged, m/m) and 2.52% (+1bps, m/m) respectively.
The small increase in benchmark yields was generally well absorbed by tightening of credit spreads at least in the GCC region. The total return on the Emirates NBD Markit iBoxx USD Sukuk index in April was a gain of 0.67% of which +0.33% came from capital gains and the remainder from coupon collection. Year-to-date the index has recorded total return of 4.36%
Two new securities, the ISDB 2024 and SHARSK 2026 were added to the index last month while the NOORBK 2020 got excluded from the index owing to it being less than one year to maturity.
Currently there are 103 issues totalling circa USD 102 billion in amount outstanding with the average rating remaining at A-.
Source: Markit, Emirates NBD Research
GCC Credit Weekly
GCC Credit Weekly
GCC Bonds Monitor
Relative value in global sukuk
Daily Outlook: Mixed messages from US data