Bond Yields Track Downwards

The surge in Irish government bond yields that preceded the EU emergency summit in Brussels last week has been more than fully reversed.  In the week since the summit the prices of Irish government bonds have been steadily rising.  At the close yesterday the 10-year yield constructed by Bloomberg was down to 10.5%, significantly down from the seen just prior to the summit.

The 10-year yield is now back to levels last seen in the middle of May.  There is still a very long way to go before these rates would allow us to sustainably raise private funding (the revised rates on loans received through the EU will be around 4%), but the current moves are at least in the right direction.

The fall in Irish 10-year yields this week contrasts with the movements for some other EU countries.  Here are the Monday opening and Thursday closing 10-year yields for a group of  EU countries.  Click the country name to go through to the Bloomberg app for that country’s 10-year bond yields.

Country	Monday Open (percent)	Thursday Close (percent)	Weekly Change (basis points)
Ireland	11.87	10.57	-130
Greece	14.75	14.78	+3
Portugal	11.08	10.84	-24
Spain	5.78	6.03	+25
Italy	5.42	5.83	+41
Belgium	4.27	4.34	+7

The 130 basis point drop in the Irish 10-year yield is a noticeable outlier.  Only Portugal amongst this group has also seen a drop in bond yields but the drop in Irish yields has seen them drop below Portuguese levels for the first time in more than a year. 

Yields for Greece, Spain, Italy and Belgium have all risen this week, with Spain continuing to have yields above the benchmark 6% level.