10-year bonds issued at 1.63% Post author By Seamus Coffey Post date October 9, 2014 NTMA note here. Categories In Uncategorized 34 Comments on 10-year bonds issued at 1.6334 ← Europe and the World → Hair of the Dog? 34 replies on “10-year bonds issued at 1.63%” Also worth noting that inflation is running at 0.3% yoy so the bond rate isn’t as insane as it first seems. But still insane. When things like this happen surely the message to the economics community is ‘stop trying to predict the future’. The Government should borrow “billions of euro” to invest in a massive social housing building programme, said the Nevin Economic Research Institute. In a challenge to established thinking on how social housing should be funded, the institute said housing could be funded through “on the books” borrowing, as a strategic investment that would return key economic and social dividends. The call comes as the Economic and Social Research Institute is seeking a significant investment in social housing to figure prominently in next week’s budget. http://www.irishtimes.com/news/social-affairs/think-tank-calls-on-government-to-borrow-billions-to-fund-social-housing-1.1956881 2.5x cover. Selling Irish government bonds, way outside OMT part of the curve, in size, doesn’t seem to be a risk to financial stability… Certainly makes all the doom porn of a few years back look ridiculous. Then again, future known unknowns and unknown unknowns could make todays hype porn look equally absurd. “When things like this happen surely the message to the economics community is ‘stop trying to predict the future’.” Volatility is gone forever , isn’t it, Johnny ? People who don’t understand economic history will never get it in time Who owns Irish debt these days? How much of it is foreign capital ? Will it be gone as soon as Janet ups the rates ? Given that the real cost of our debt is now so low, surely large infrastructure spending actually pays for itself and we’ve beaten the economy to the state where the amount of underutilised capital and labour is huge. Wouldn’t it be merit in a large infrastructure spend! Social housing is great, as would be better public transport. Nobody thinks about faster trains alleviating the housing crisis, but if I could commute from the midlands in an hour (definitely possible with good rail systems) then I would move out there happily, as would many people (hence why it costs so much to live anywhere on the dart line). @seafóid What lessons from economic history would have told you, say 2 years ago, that the Irish bond yield would be 1.96% today? There are two many moving parts to pretend that economic forecasts are anything other than story telling. All you can do is ‘nowcast’. There are two types of errors that are commonly made by economists. First, pretending they have any clue what is going to happen any more than 12 months down the road. Second, denying the evidence that is staring them right in the face, of what is happening right now, because it doesn’t fit with a larger story they have told themselves. I have no idea where the Irish economy is heading next year, but I know enough to know that right now things are getting better in a hurry. @Johnny Foreigner Minor point: ‘… things are getting better FOR SOME … Take a free tutorial: The idiot/ eejit’s guide to distorted Irish national economic data http://www.finfacts.ie/irishfinancenews/article_1028148.shtml Love those ‘green lights’ … @JF A lot of people and institutions are in the market because they have to do something other than leave their money in cash . And given risk premium compression most of them are not taking credit risk into account. It’s just yield, yield, yield. All day . All night. Fifa la fiesta. Fifa Janet . Never bet against the Fed. And I called my friend Johnny and I said to him La gente esta muy loca http://www.youtube.com/watch?v=542urpAYRVA Now that you know more than any economist in the brave new post economic fundamentals landscape do you think Pimco should write more volatility insurance ? So, even in the Irish Times a poll shows the electorate preferring tax cuts to increased spending. Quelle surprise. http://www.irishtimes.com/news/politics/voters-want-tax-cuts-over-better-public-services-1.1958425 Shows how out of touch this site is. Also, over 80 per cent supported recent decision to reduce property tax by 15 per cent. Yet, most of the commentariat, most economists, and the idiot Dublin City Manager, Owen Keegan, condemned it. @JTO you forgot about ponies I think a good test of how others see the renaissance will be if they can flog PTSB for a decent price http://www.rte.ie/news/business/2014/1010/651338-permanent-tsb/ Equity bubble bursting? The US market rallied strongly after Fed minutes showed concern about global growth, which presumably should be bearish for stocks. Turned around since and global markets falling. Core bond yields falling and it will be interesting to see what happens to euro peripheral yields if that continues-Irish 10 year are up a little at 1.7%. Brent crude is down below $90 now. Is that due to dollar strengthening or concerns about global growth or both ? I think we may be looking at volatility again. Dan, European Equity markets have been tanking for some 3 weeks now. The fear is that Draghi has had his guns spiked by Crazy Jens and cannot do QE. Of course if TSHTF, maybe the Krauts cave in. So lets get those markets down and see what happens next. I think these bond yields are a sign of how poor the outlook is. Bond markets are really depressed about the future and equity markets are in denial. And house prices should not really be going up in the circumstances. Finland aaa to aa+ at s&p on gdp. seafoid, a sub-90 brent, together with Euro exchange rate of 1.26 translates into a gasoline price of 1.499 today, instead of a 1.514 on 10/20/2013. German factory orders are down 5% because of the trade sanctions with Russia, which hit most of Eastern Europe. Such things happen. Of course, that just brings back all the panic mongerers demanding criminal actions : – ) Dan, FTSE and DAX have now given back all the hot air blown in in the first half of 2014, so far nothing to worry, but with a slip of 10% notable corrections, which happen every 2 years or so. On Draghi, we will see what the ECJ has to say next week. You don’t here much from the Finns these days about going solo outside the Euro anymore. I think we are close to the time when a Southern European leader or even a Prez LE Pen says Germany will not be allowed destroy Europe again. @JTO So, even in the Irish Times… Even in the Irish Times? Are you suggesting the former paper of record has had progressive tendancies since the days of Gageby? Really? The papers sole leftist (O’Toole) is only allowed as he is safe on the North. On the survey’s “clear” preference of people for lower taxes you would be well advised to check the byline of the article. One Stephen Collins. http://www.progressive-economy.ie/2014/10/deeply-misleading-irish-times-report-of.html?m=1 Needless to say I work in the private sector and think tax cuts at the higher rate are not just a very low priority but a very bad idea. There is another good post at TASC on public sector fat cats, or not as the case may be. I don’t think it’ll get as far as Presidente Marine, Tull The French business community are not stupid, John Lewis notwithstanding. The Finns really messed it up, didn’t they ? So much for all that Northern Protestant savoir faire. The Dutch are not doing very well either, the smug sobs (2010 vintage) Francis None of the OECD’s big hitters can grow by more than 3%. Why is this, do you think? @The lumpen German proletariat … In Solidarity ‘Prof Fratzscher accuses Germany’s elites of losing the plot in every important respect. Investment has fallen from 23pc to 17pc of GDP since the early 1990s. Net public investment has been negative for 12 years. Growth has averaged 1.1pc since the beginning of the decade, placing Germany 13th out of 18 in the eurozone (or 156th out of 166 countries worldwide over the past 20 years). This chronic weakness been masked by slightly better growth since the Lehman crisis, and by the creditor-debtor dynamics of the EMU debt crisis. German looks healthy only because half of Europe looks deathly. The Hartz IV reforms – so widely praised as the foundation of German competitiveness, and now being foisted on southern Europe – did not raise productivity, the proper measure of labour reform. Data from the OECD show that German productivity growth slumped to 0.3pc a year in the period from 2007 to 2012, compared with 0.5pc in Denmark, 0.7pc in Austria, 0.9pc in Japan, 1.3pc in Australia, 1.5pc in the US and 3.2pc in Korea. Prof Fratzscher says the chief effect was to let companies compress wages through labour arbitrage. Real pay has fallen back to the levels of the late 1990s. The legacy of Hartz IV is a lumpen-proletariat of 7.4m people on “mini-jobs”, part-time work that is tax-free up to €450. This flatters the jobless rate, but Germany has become a split society, more unequal than at any time in its modern history. A fifth of German children are raised in poverty. Philippe Legrain, a former top economist at the European Commission, says Germany’s “beggar-thy-neighbour economic model” works by suppressing wages to subsidise exports, to the benefit of corporate elites. This is “dysfunctional”, and the more that EU officials try to extend the model across the eurozone, the more dangerous it becomes. http://www.independent.ie/business/world/german-mercantilist-model-is-ruinous-for-germany-and-deadly-for-europe-30651089.html What I would not give for a real, functioning Central Bank of Europe …. as distinct from the feeble deutscher_frankfurther_clone that the EZ Citizenry is presently lumbered with …. @francis We know that you have had some difficulty with finding ANY empirical/theoretical social scientific references in support of the ‘fictive abstractions’ within Angela’s Fiscal Corset ….. With which ‘numerical abstractions’ within Herr Fratzscher’s piece do you disagree or refute ….. David, I was actually thinking about putting some stuff together about the numbers of the fiscal compact. The main point is about being politically correct with people, who advocated criminal acts as a birth right, not only in this blog. For you it is sufficient, that the fiscal compact is a treaty, which is in the real world just not up for discussion. To the Fratzscher nonsense : 1. people like Fratzscher making claims, have to show proof, and not the other way around. NO references is an unprecedented sign of intellectual bankrupty, … or does somebody point me to some parallel ? 2. I have posted in this blog at least 4 detailed comments (numbers, references, calculations) to DOCM bringing it up about 6 times here. Should I spam every single thread here with repetitions, just because somebody like you doesnt remember ? Or cant look back? “the fiscal compact is a treaty, which is in the real world just not up for discussion.” One of the big problems in the EZ, Francis, is that the boxwallahs are too slow to react to EVENTS. It’s a treaty. So what? That was yesterday’s war. Do you remember the Maginot Line ? That was a sort of treaty too. Deflation is coming at Germany through the Ardennes. And it’s lethal. And you need fresh thinking The pillars of the ECB’s job are inflation and money supply and it’s failing on both. You need a new treaty http://www.youtube.com/watch?v=S7cbkxn4G8U Prof. Marcel Fratzscher, Ph.D. Marcel Fratzscher is President of DIW Berlin (German Institute for Economic Research), Professor of Macroeconomics and Finance at Humboldt-University Berlin, and Member of the Advisory Council of the Ministry of Economy of Germany. As an independent institute with 250 employees, DIW Berlin is one of the leading research institutes and think tanks in Europe. Its key tasks are applied research and policy advice, and it has its own PhD program. His own research covers a broad range of issues in the fields of macroeconomics, international finance, monetary economics and international policy co-ordination. His current research focuses in particular on the European crisis, financial stability and capital controls, the global transmission mechanism of crises, and the reform of the European and international monetary systems. His work has been published in a number of leading academic journals. He has been awarded the Kiel Institute Excellence Award in Global Economic Affairs in 2007 for his work on global financial linkages and monetary policy, and the CEPR 2007 Prize for the Best Central Bank Research Paper for his work on asset price bubbles and global imbalances. His prior professional experience includes work as Head of the International Policy Analysis Division at the European Central Bank (ECB), where he worked from 2001 to 2012. His division was responsible for the preparation of ECB policy positions on global systemic economic and financial issues, on emerging economies and on issues related to the international monetary system. He was a visiting fellow at the Peterson Institute for International Economics in Washington D.C. in 2000-01. Before and during the Asian financial crisis in 1996-98, he worked in Indonesia as a Macroeconomic Policy Analyst at the Ministry of Finance of the Republic of Indonesia, Jakarta, for the Harvard Institute for International Development (HIID). He also spent shorter periods working at Mwaniki Associates in Kenya, the Asian Development Bank in the Philippines, and the World Bank in the US. He received a Ph.D. in Economics from the European University Institute (EUI) in Florence, Italy; a Master of Public Policy from Harvard University’s John F. Kennedy School of Government; a B.A. in Philoso¬phy, Politics, and Economics (PPE) from the University of Oxford, Trinity College; and a Vordiplom degree in Economics from Kiel University. He is a European citizen, having grown up and having obtained his primary and secondary education in Germany. http://www.diw.de/de/diw_01.c.100376.de/ueber_uns/menschen_am_diw_berlin/mitarbeiter/innen/mitarbeiter/innen.html?id=diw_01.c.414852.de&sprache=en @Prudent Hans ‘For you it is sufficient, that the fiscal compact is a treaty, which is in the real world just not up for discussion.’ Did you ever hear about The Treaty of Limerick? or Westphalia? You’re losing the plot – not as bad as Willke – but close enough. I see that Herr Fratzscher did a bit of philosophy in Oxford – suppose they don’t teach it anymore in OrdoLiberal Lande. He should have come to Dublin and drank pints like Wittgenstein …. @Tull re: European Markets “European Equity markets have been tanking for some 3 weeks now. The fear is that Draghi has had his guns spiked by Crazy Jens and cannot do QE. Of course if TSHTF, maybe the Krauts cave in. So lets get those markets down and see what happens next.” Could it also be that the bank stress tests are currently being finalized and collated, with some not so pleasant results, with key players have been given a heads up, as usual? The timing of the PTSB announcement could be a sign that something will have to be done, rather quickly. PTSB seem to have appointed every high-rolling advisor on the block to ‘advise’ them. $issing more money down the toilet. What advise do they need? Put it into examinership, rewrite the trackers to variable rates, and hey presto, its a profitable bank to be retained in State ownership until every cent of the bailout money is returned. The only thing those advisors want is their fees, ultimately paid for by the Irish taxpayer, and a fire-sale to make their buddies rich. “We are getting tired of all this endless panic mongering, ” With all due respect, Francis, I’d listen to Smithers first http://blogs.ft.com/andrew-smithers/2014/10/the-eurozone-and-quantitative-easing/ Francis, I really hope there is a showdown. Germany should be told to get lost and get out of the EU. Go join up with other like minded societies like ISIL. @Prudent Hans Your ‘careful judgment’ is somewhat childish for a Physics PhD! Here are a few references for you to feast your ‘scientific eyes’ on: http://www.diw.de/documents/dokumentenarchiv/17/diw_01.c.414857.de/diwcvlong_en_mfratzscher.pdf Simply not cricket ol’ boy, let alone European, to be making short-term profit of the misery of the peripheral citizenries forced into Angela’s Corset. Germany has found itself in a leadership position – but is unable or unwilling to move from the local deutscher ‘belief’, as distinct from social scientific, to the ‘general’ well being of the EU Citizenry. You used to have the ‘intellect’ but presently you lack the ‘WILL’. Sad. On the political front you have allowed the rabid russophobe neo-kon Nuland to mess up the relationship with Russia – and allowed the EU to become ‘Uncle Sam’s Bitch’. Putin simply ‘Shrugged’ … That said, I remain in the Kantian, Marxist, Weberian, Habermasian, Frankfurt School tradition …. which has re-located to West Kerry … Jacinta Heisenberg from Ballybrack is simply lovin in down there …. What has happened to Germany? German businesses started to invest in Eastern Europe including the GDR in 1989. This was followed by investment outside of Europe shortly after the expansion to the East. Investment in Germany dwindled by comparison. Some people attribute this lack of investment to demographics in Germany, the same could be said of Italy and Japan. The French and Irish are the only countries in Europe that are holding their populations steady. As Francois Hollande said in a recent speech, France will be the dominant nation in the EU by 2040. The French are obsessed by the idea of “family” being a couple (m/f) with 4 children (ideally). In Ireland we like children and all the complication that accompanies them. Or more accurately the Irish women love children and we males must at least fake it until we make it. The under current in European terms being our 25 year olds will wallop the hell out of your 65 year olds in any war after 2040. Industrial superiority is but a shooting star while a young and able work force goes on as long as the cradles are kept filled. Comments are closed.