Advertisement

We need your help now

Support from readers like you keeps The Journal open.

You are visiting us because we have something you value. Independent, unbiased news that tells the truth. Advertising revenue goes some way to support our mission, but this year it has not been enough.

If you've seen value in our reporting, please contribute what you can, so we can continue to produce accurate and meaningful journalism. For everyone who needs it.

Borrowing Costs

One stunning Irish bond chart tells the whole story

“What a ride…”

image

Need a larger version? Click here. (Image: @BondVigilantes/Twitter)

HERE’S A STUNNING chart that shows Irish five-year borrowing costs against the equivalent for the UK and the US.

During the heat of the eurozone crisis, Irish yields soared. Today, Ireland is borrowing for less than the UK and the US.

The chart kind of tells the whole story of Europe. During the crisis, the big fear was default, and so investors demanded sky-high yields to be compensated for the risk that Ireland (or one of its peripheral counterparts) would miss a payment and possibly leave the eurozone.

That fear is no more. The new fear among euro area countries is a slowing economy and deflation.

Ireland is borrowing for less than the UK and the US not because it’s deemed to be a better credit risk — it’s not — but because the economy is expected to be weak and inflation is expected to be non-existent.

(Conversely, yields in the UK and the US have been trending a bit higher on hopes of a breakout in economic strength).

This one chart therefore tells so much about what happened over the last few years, and how the story has dramatically changed.

- Joe Weisenthal

Related: Markets react positively to Ireland’s credit rating upgrade

Published with permission from
Business Insider
Your Voice
Readers Comments
48
    Submit a report
    Please help us understand how this comment violates our community guidelines.
    Thank you for the feedback
    Your feedback has been sent to our team for review.