Friday, January 6, 2012

Back to eight percent

The last time we looked at Irish government bond yields we wondered whether they were heading back to ten percent.  In the space of just two days the the yield on the nine-year Irish government bond as calculated by Bloomberg surged from 8.2% to 9.6%.  Since then the yields have shown a gradual decline back to 8.2%.

Bond Yields 3M to 06-01-12

On the 6th of January 2011 the yield as given by Bloomberg closed at 8.80%.  Today it finished at 8.13%.  In relative terms these bonds are viewed as a lower risk now then they were 12 months ago.

We can’t infer a huge amount from these changes.  The volume may not be very high and we cannot be sure who is doing the buying, if any.  Also we will not be borrowing from these markets any time soon so there is no direct impact from these changes.

The relative performance of 9-year Irish (green) and 10-year Italian (orange) bond yields for the past month has been markedly different.

Ireland Italy Bond Yield 1M to 06-01-12

1 comment: