Friday, August 19, 2011

Another day, another drop in yields

The 10-year yield on Irish government bonds dropped below 9.5% today.

Bond Yields 1D 19-08-2011

We can’t be sure what this happened and it could be the result of artificial intervention by the ECB.  I not sure and really can’t see the value of the ECB buying government bonds for a country that is already in a rescue programme.  It could be like this report back in July which stated that it was “real money” coming back into the market.

Here is the full list of all outstanding bonds at the close of business today.  Click to enlarge.

Outstanding Bonds 19-08-11

There is now no Irish government bond yielding more than 10%.  It is clear that concerns about out funding after the current EU/IMF programme expires have eased considerably.  The D-Day bonds maturing on the 14th January 2014 are now yielding 9%.


  1. Another step in the right direction. Hopefully we'll see an 8 on the front of our 10-year bond yields by the end of the week. That would be a great recovery from the 14.5% peak we hit a few weeks ago. Btw, did you see the Exchequer figures for July? The underlying deficit is down €2bn on last year, corporate tax returns are better than expected and even income tax ex changes introduced in Budget 2011 is firm. Perhaps we are in the foothills of a recovery!

  2. Hi Cathal,

    I think 8.x% by the end of the week would be great = maybe a bit optimistic though! I don't expect there to be too much news during the week to move yields again.

    The yields themselves don't really matter than much. They do give an indication of how much investors need to buy Irish bonds, we continue to pay the fixed coupon on them,most of which are between four and five percent.

    We would need to see yields back to near those levels before we can think about issuing new debts into the markets. This is a much stronger possibility now but is by no means guaranteed.

    I wouldn't be as effusive about the Exchequer Returns. The income tax increase is primarily down to the reclassification of the old Health Levy into the new Universal Social Charge.

  3. Down to 9.3% this morning Cathal, maybe 8.x is not that optimistic after all!