Irish bond yields hit new low after QE annoucement

Irish bond prices have stormed ahead with ten-year bond yields falling as low as 1.065 per cent this morning, an all-time low.

The move follows yesterday's QE announcement by the European Central Bank (ECB), which has boosted bond prices across Europe and led to a fall in the value of the euro.

Irish ten-year bond interest rates had traded at around 1.15 per cent immediately after Thursday's announcement, but prices rose strongly this morning, pushing yields - or bond interest rates - lower. This was in line with a move across Europe, which saw benchmark German 10-year bond yields drop to just over 0.4 per cent, with Spain, Italy and France also hitting record lows for yields.

The move was prompted by the ECB's promise to buy €60 billion in assets every month up to at least September 2016, the bulk of them government bonds. Lower bond yields, if sustained, will make it cheaper for the National Treasury Management Agency to raise fresh funds on the market as it borrows money to refinance existing debt and cover the government deficit.

Central banks, including the Central Bank of Ireland, will step into the market in March and start buying government bonds as part of a programme overseen and directed by the ECB The move is designed to provide banks and investors with fresh cash to lend out and invest across the euro zone economy.

However by providing a new source of demand for bonds it should also support prices and keep long term interest rates low.