Bonds: Investors give thumbs-down to Lisbon, green-light for Dublin
These were the movements in the yields of the most widely-followed 10-year sovereign bonds:
US: 1.60% (-7bp)
UK: 1.30% (-11bp)
Germany: 0.19% (-5bp)
France: 0.60% (-2bp)
Spain: 1.78% (+6bp)
Italy: 1.71% (+8bp)
Japan: Bank holiday
Greece: 11.57% (+6bp)
Portugal: 4.11% (+40bp)
Gilts outperformed again on Thursday, as investors sought a haven from the storm buffeting global capital markets and bank shares in particular.
Despite some strategists' assertion that there were signs of capitulation in markets, at one point in the session the yield on the benchmark 10-year Gilt hit a record low.
That came amid a larger-than-expected interest rate cut by the Riksbank, possible FX intervention by the Bank of Japan and remarks from Swiss National Bank governor Thomas Jordan that nothing was off the table in terms of further deposit rate cuts.
The above prompted 'market-chatter' of a race-to-the-bottom by central banks and the need to manage exchange rates in a more coordinated fashion.
There was vague talk in some corners that G20 finance ministers might broach the possibility of some sort of new Plaza Accords when they met in Shanghai the following week.
To take note of, Portugal's sovereign debt registered hefty losses, taking them further away from the 2.3% mark they were at following the election that brought the Socialist minority government to power on 4 October 2015.
Last week, the European Commission told Lisbon it must act to meet the country's budget deficit within the EU-mandated limit of 3%, but did not block its plans to reverse cuts to state salaries and raise the minimum wage.
Elsewhere in the Eurozone periphery, Spain's Socialists PSOE party has vouched to roll-back labour market reforms put in place by the previous administration in Madrid should it come to power.
Closer to home, the Irish Treasury got off €1.0bn in 10-year debt at a record low yield on Thursday in the face of election uncertainty, amid a recent sharp increase in demand for those sovereign bonds deemed safest by investors.
Ireland's National Treasury Management Agency auctioned the May 2026 notes at a yield of 0.999%, versus the 1.156% seen the last time around, about a month ago. Investors put in €1.8bn worth of bids.
Irish reform efforts in the aftermath of the Great Financial Crisis have been rewarded by international investors with lower funding costs when compared with their peers on the Eurozone periphery, such as Spain, Portugal or Greece.