Key government bond yields fell further last week after Standard & Poor’s (S&P) downgraded Ireland to AA and warned the country’s outlook remains negative.
Rebecca Seabrook, co-head of UK credit at F&C, says yields on gilts, treasuries and bunds all fell again, although Ireland’s downgrade itself had little impact on the large economies.
Sovereign debt problems have been apparent for some time and Ireland’s downgrade was widely expected. (article continues below)
S&P says Ireland faces substantially higher costs to support its ailing financial institutions. This has increased worries about the eurozone’s stability.