Irish And Portuguese Government Bond Yield Spreads At New Record Highs
Irish 10 year government yield spread versus same maturity German issue rose today to new highs. Both Barclays Capital and Goldman Sachs issued their reports in the last couple of days claiming it is not clear whether Ireland can finance its budget deficit without EU/IMF help.
On Friday ECB intervened buying Irish government bonds. FT story: ECB intervenes in Irish bond markets.
Traders said the intervention by the ECB was small – in the tens of millions of euros but the report by Barclays Capital still prompted the International Monetary Fund to state it did not envision that Ireland would need financial assistance.
We have two Irish bond auctions scheduled for tomorrow (4&8 year government bonds). Markets, in my view, are not paying much attention (for now)…
Chart 1. Ireland vs. Germany 10 Year Government Bond Yield Spread
Source: Bloomberg
Portugal yield spread also at record wide thanks to earlier mentioned Barclays Capital research report. We have two Portuguese auctions on Wednesday.
Chart 2. Portugal vs. Germany 10 Year Government Bond Yield Spread
Source: Bloomberg
Greece mostly unchanged in recent days.
Chart 3. Greece vs. Germany 10 Year Government Bond Yield Spread
Source: Bloomberg