There has been little to say about Irish bond yields for the past month or so, except that they have been holding steady. From the 1st of September the 10-year yield as calculated by Bloomberg has closed each day in a range from 8.5% to 8.8%. This is well down at the 14% peak from mid-July but still above level that would make returning to borrowing from these markets feasible.
We cannot use the "steady as she goes” description for the rest of the bailed-out PIG countries. Greek yields are off the chart as they hurtle ever closer to default. Portuguese bonds have not reacted favourable to the recent market turmoil. There is now clear light between the yields on Irish and Portuguese government bonds as show here.
This chart from Bloomberg represents the relative performance of Irish and Portuguese bonds over the last three months. The yields for both countries were just below 12% at the time the series begins at the end of June. Both rose in the run-up to the July EU summit and fell in the immediate aftermath with the proposed interest rate reductions.
However, by the start of August the drop in Portuguese yields had stalled at around 11% while Irish yields fell right through to the end of August and only stalled at 8.5%. Since the start of September Irish yields have hovered at that mark, while Portuguese yields have edged back up and are back over 12% today.
It is useful to see this gap emerge between the yields but it will only be beneficial is this is because of a falling green line rather than a rising red line in the above graph. Hopefully, we have a better plan than “we’re sticking to our knitting” as Richard Bruton says at the end of this interview on CNN.
No comments:
Post a Comment