Credit markets subdued on G20
The credit markets have so far made a muted response to the G20 Summit. "The bond markets have not made up their mind yet," says Alan McQuaid, an economist at Bloxham Stockbrokers. "The positive out of all of this is that monetary policy looks set to remain tight for the foreseeable future."
McQuaid argues that the focus on the austerity programmes throughout Europe is misplaced and that the emphasis should be on stoking growth to ensure that buoyant national income solves the debt problem. Consequently, the pledges to bring debt levels back with the terms of the Growth and Stability Pact should be rolled out by 10 years, says McQuaid.
Irish 10-year bonds are currently trading at 307 basis points above the benchmark German bunds, which is a sign of the turbulence still affecting the region.
McQuaid argues that Irish and Spanish Government bonds offer the best value on the basis that neither are likely to default.
