Ireland's borrowing costs rise despite diplomacy
Published 21/06/2011 | 05:00
Worries over Greece and peripheral economies like Ireland continued to mount on bond markets yesterday, despite reassurances from Europe's politicians, although share markets did recover some ground later in the day.
Bond yields for Ireland, Greece, Spain and Portugal rose for all maturities as political deadlock in Greece hindered plans to extend fresh money to the debt ravaged country.
Share markets were less concerned about the situation with US equities rising for the third day, while the euro rose slightly to $1.4314 in New York.
Ireland, which will benefit from changes in the European Stability Mechanism (ESM) agreed yesterday, is now facing borrowing costs -- on the second ary market -- of 10.9pc for ten-year money, with yields rising by seven basis points yesterday. Yields for Greece surged by 38 basis points to 16.6pc, although two-year money is priced at 25.9pc for Greece, with yields surging by 79 basis points yesterday alone.
Share buyers appear less worried about the situation than the credit markets, at least judging by the main indices.
The Stoxx Europe 600 Index fell 0.5pc, recovering more than half of a 1.1pc slide. The 10-year Treasury note yield was up two basis point at 2.96, after sinking as much as six points earlier.
The S&P GSCI Index of commodities fell for a fourth day, with Brent crude, heating oil and coffee leading the declines.
The euro also erased its decline versus the yen as Luxembourg's Jean-Claude Juncker said Italy was not in danger from the debt crisis.
"We may be past the point of maximum pessimism," said Madelynn Matlock, who helps oversee $14.8bn (€10.4bn) at Huntington Asset Advisors in Cincinnati. (Additional reports from Bloomberg)