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Dublin: 7°C Wednesday 12 May 2021
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Was Cowengate to blame for a second spike in bond prices?

Irish bond prices took a moderate increase yesterday – was a ‘hoarse’ early-morning interview to blame?

This Bloomberg chart shows the market price of Irish debt over the last month. Last week's uncertainty about Anglo Irish Bank is the largest peak; yesterday's trading is to the right.
This Bloomberg chart shows the market price of Irish debt over the last month. Last week's uncertainty about Anglo Irish Bank is the largest peak; yesterday's trading is to the right.

IRISH BOND YIELDS took another modest rise yesterday as the demand for commodities on world markets all took a spike on the back of a depressed market for the dollar.

10-year bond rates closed at 5.857% yesterday, up from 5.789% yesterday morning – a proportionate jump of 1.17%, a relatively significant daily jump.

The yields were, however, still well down on their record prices from last week – where the interest demanded for government borrowing breached the symbolic 6% barrier for the first time.

By comparison, however, similar bonds issued by the Greek and Portuguese governments had no such spike: Greek bonds remained virtually unchanged, while the rates on Portuguese bonds fell over the day.

Because the Green and Portuguese prices would tend to move in unison with Irish bonds given any major international shock, the spike remains broadly inexplicable – though some commentators now believe that the international media coverage of Brian Cowen’s Morning Ireland interview could be to blame.

The rise could also be attributable, however, to an offload in bonds as the price of commodities rocketed; gold struck an all-time high of above $1,267 an ounce, while the price of silver, tin and copper also took a spike.

It is separately emerged, meanwhile, that the European Central Bank purchased €237m of government bonds last week, the highest amount it has spent since the middle of August.

The vast majority of these bonds were in Greek, Portuguese and Irish debt. The fact that the ECB have had to increase their intervention in markets is a sign of how the Eurozone remains unstable.

The volume of Irish bonds traded last week, however, was €2.6bn – meaning that the ECB’s purchases of Irish bonds was smaller than first anticipated.

About the author:

Gavan Reilly

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