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Dublin: 15 °C Wednesday 15 July, 2020

Bond yields dip under 6% on Budget consensus briefings

The price of ten-year borrowing for the government falls below the 6% mark as investors applaud consensus.

Image: PA

THE NEWS that finance spokespersons from the opposition parties are being given a chance to examine the state of the country’s finances seems to have gone down well with international investors – the price of government borrowing today fell under 6% for the first time in over a month.

The yield demanded by bond markets on Irish ten-year debt – which had risen above 6% in mid-September amid fears that the government would be unable to afford the mounting cost of the banking bailout – fell below 6% shortly after 11:30am this morning.

The fall in today’s value is a significant one, with the bonds trading at 6.12% when trading opened this morning.

The price hovered back slightly above the 6% barrier later in the afternoon, however, lying at 6.01% as of 3:20pm.

The fall in the bond yield meant that the spread between Irish and German 10-year bonds had fallen back to 362bps, the tightest spread in several weeks of trading.

The price of four-year, six-year and eight-year bonds also lost reasonable amounts, with the four-year bond losing 2.6% of its relative value to lie at a yield of 4.2%. The price of two-year bonds rose slightly, however.

In other European markets, the price of Portuguese ten-year bonds also fell significantly, down to 5.519% from an opening price of 5.74%, while Greek ten-year paper was trading at 8.846% – its lowest price since mid-June.

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About the author:

Gavan Reilly

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