Photo: University College Dublin
Earlier this morning we mentioned how Irish 10-year yields have climbed back above 7% to a brand new high.So what’s up?
According to FT Alphaville (via LorcanRK), the catalyst may be this article in the Irish Independent quoting economist Colm McCarthy as saying “the game is up” December 7 if the government doesn’t deliver a credible budget.
If the government doesn’t cut deep enough — and given the weakness in the Irish economy, seriously deep cuts may be hard to come by — financial markets will officially lose faith in the government, and the IMF will need to be brought in. Game over.
Bear in mind, Ireland isn’t currently active in the bond market, but McCarthy warns that by early next year, it will need to re-enter the market in a pretty big way, as cash reserves dry up.
Of course, despite this, and the ongoing Greek disaster, the euro has hardly budged downward in ages.