The bond markets, worried that Ireland’s political situation could upset bailout plans and fearing contagion to other euro zone countries, sent bond spreads soaring and demand for U.S. 10-year Treasuries and German government bonds rising on Friday.

According to reports from the Financial Times and ThomsonReuters, yields and spreads were as follows at market close on Friday, Nov. 26: 

 

Bid
Yield

Spread vs.
German Bund

Spread vs.
U.S. T-Bonds

Ireland

9.37%

+6.63

+6.50

Portugal

7.17%

+4.43

+4.30

Spain

5.21%

+2.47

+2.34

Greece

11.89%

+9.15

+9.02

U.S.

2.87%

+0.13

Germany

2.74%

-0.13

 

While there has been speculation that Ireland’s acceptance of a bailout from the European Union (EU) and the International Monetary Fund (IMF) would settle investors’ concerns, such has not been the case so far. Irish, Portuguese and Spanish bonds suffered on Friday, and Greece continues to see its government bond yields rise as well, the only means of tempting investors who have little faith that the country will succeed in righting its financial situation. On Friday, according to the Business Times, rates were at their highest levels since June 29; previous to its bailout in May, Greek bonds’ yield was at 8.96%.

On Saturday, demonstrators crowded the streets of Dublin, as some 10,000 marched against the austerity plan and the IMF 85 billion euro bailout, which European Union finance ministers finalized on Sunday.

Reuters reported that U.S. Treasuries were also in demand because of the tense situation on the Korean peninsula, and cited a Credit Suisse analysts’ report that said peripheral European nations were changing their euro holdings into dollars. “Some of the peripheral European borrowers have taken extra funding from the European Central Bank and will seek to swap it into USD to ensure they are fully funded over the turn and beyond,” the Reuters report quoted the analysts as saying.