Rally continues as markets expect bond-buying from ECB

THURSDAY’S BOND market rally continued yesterday, with Spanish and Italian bond yields continuing to fall as German chancellor Angela Merkel and French president François Hollande gave a joint commitment to safeguard the euro.

Ireland also took part in the general bond market rally, which was fuelled by market expectation of future bond-buying by the ECB, signalled by comments from the central bank chief, Mario Draghi.

The new 2017 bond issued by the NTMA on Thursday at a yield of 5.9 per cent was yesterday evening trading at 5.75 per cent.

Peter Cosgrave of Dolmen Securities in Dublin said that while the fall in yields showed “continued interest” in Irish bonds, the strengthening of Irish bonds was also symptomatic of the rally in bond markets generally.

Ten-year Spanish debt was trading at 6.75 per cent, having hit a euro-era high of 7.75 per cent on Wednesday.

Italian government debt of the same maturity fell to 5.96 per cent yesterday evening.

In a joint statement yesterday, the French and German leaders said their countries were “bound by the deepest duty” to keep the euro area intact.