The Markets

“Bravo Ireland”

I wasn’t expecting to see this headline quite so soon but nonetheless it’s still a welcome one – ‘Ireland’s borrowing costs fall below the UK’s’.

Well if ever there was a sign of recovery, confidence and some success it has to be the cost of a country’s debt. For the first time in 6 years the yields on the 10 year Irish bonds and UK Gilts swapped over. The Irish yield on the bonds fell to 2.656% – remarkably cheaper than the equivalent UK Gilt yield of 2.683%. This though does not seem to be a blip but rather a pattern as we can see similar trends with their shorter two year and five year debt. 

Now whilst such figures are definitely encouraging and show a greater level of confidence, the governments in those recovering Euro nations under their old acronym of PIGS all have to try and turn such data into something far more difficult to achieve – popular confidence amongst the citizenry and population. Turning bad debt into better debt may be one thing but turning around popular confidence into a feel good factor may well have all the tribulations of being an alchemist. Electoral gold when youth unemployment is around 50% will still likely remain the populist lead until the ‘man in the street’ can start to feel a real change. 


With equity markets looking buoyant certainly in the US and even in the UK (the FTSE 100 INDEX rose 14.60 points to 6,830.35 as trading got under way after the bank holiday weekend), it seems that despite political issues around Ukraine, Syria and the South China Sea, investors are still keen to be investing. If you look at the corporate figures they are still looking relatively positive. But if you are looking for a forecast, then maybe a warning that the next cycle of El Nino is likely to start in July might be something to watch. This weather phenomenon can trigger drought in South East Asia and the Antipodes, and subsequently floods in South America.