Irish Bond Yield Falls

OakesP, yes this is getting tedious and is adding little to the discussion.

I also agree that much of this cannot be proven without - let's say - conducting a statistically significant survey to determine what finance professionals what they would make of the sentence. That obviously is not going to happen so let's drop it and agree to differ.

However, you've accused me multiple times of being wrong and erroneous in my reading of your original comments and that is simply not fair. The comment I responded to was the following:
I take the point mentioned by another poster that there could be an issue with the journo (whoever he/she is) not understanding what was written, but the written words are not wrong and as someone else pointed out are in fact standard reporting
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I challenged the "standard reporting" aspect of this in the context of the phrase "declines in bonds" which - if you read some of the prior comments at that point in the thread - was what I was attempting to explain to umop3p!sdn. Without having qualified which exact words you were referring in the above sentence, you can not fairly accuse me of being "wrong" in my reading of your comment. Your "magnanimous" forgiveness of my "error" grates a little, you will appreciate.
 
This is tedious. PM me if you wish. Happy to discuss via email or indeed by phone.
 
As an ordinary layperson who could not engage in the technical discussions already in this tread i am just wondering if Mr Cowan,s reaction to the increase in our bond yields as just an "ebb and flow" situation. From what i see it is going up and not much sign of coming down which ebb and flow would suggest.
 
Yeah thats worrying. A bit like the rumour around Anglo months before it went down the toilet.

What happens when you approach the IMF, they give you money in return for radical changes to public finances?
 
6.5% yield on 10 year bonds

I bought a shed-load of 6.5% bonds for my pension fund on Friday, the logic being that I will continue living in Ireland, come what may (I'm too old to think of emigrating); I have some money in Post Office Bonds, and these bonds have to be as safe as money invested in the Post Office - the government can't default on some of irs debt while leaving other savers untouched - but are yielding considerably more. Is there a hole in my logic?
 
Note that three are three rates or yields associated with bonds.

Note that all bonds have a coupon, this is the interest paid by the borrower (i.e. the Govt in this case).

Then there is the running or current yield, which is the coupon divided by the current price.

So a bond may have been issued a few years back at 4% coupon.

The price has fallen now well below the 100 euro par value. Say it has fallen to 80. So the original holder of the bond has a papercapital loss of 20%. (You can lose on bonds!!)

They sell at 80, you buy at 80.

You earn 4 / 80 = 5% running yield from the annual 4 euro interest.

You will also get 100 back when it matures, so that's 20 of a capital gain.

Add the running yield to the capital gain/loss gives you the yield to redemption or maturity (YTM).
 
Carramore said:
I bought a shed-load of 6.5% bonds for my pension fund on Friday, the logic being that I will continue living in Ireland, come what may (I'm too old to think of emigrating); I have some money in Post Office Bonds, and these bonds have to be as safe as money invested in the Post Office - the government can't default on some of irs debt while leaving other savers untouched - but are yielding considerably more. Is there a hole in my logic?
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With the Euro we're in unchartered territory here, but in the past Govts have defaulted on debt.
In the US, if a state or municipal authority was to default, I believe the Fed would step in.
In the Eurozone, not sure what the rules are.

(edit, added some links)
Argentina announces debt 'default' plan
http://news.bbc.co.uk/1/hi/business/1633369.stm
Harrisburg, Pennsylvania, Bond Default Averted With State Aid
http://www.businessweek.com/news/20...ania-bond-default-averted-with-state-aid.html
 
DerKaiser said:
Maybe that's why €3bn of cuts have been replaced with a minimum of €3bn of cuts
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Prof Honohan also talking about a minimum of €3bn cuts.
It is interesting when he says these measures are needed to get the deficit "close to 3%" by 2014, which I take as he does not believe we will actually achieve the 3% target.

[broken link removed]
 
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