Super Mario Draghi’s quantitative easing giveaway sends sterling to 7-year high

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The European Central Bank president’s move sent sterling to €1.336 — the strongest since January 2008 — heralding cheaper holidays on the Continent.

Investors meanwhile dashed into sovereign bonds, sending the borrowing costs of several countries to record lows.

The benchmark cost of borrowing for Spain for 10 years hit a record low of 1.23%, and Italy’s 10-year paper is now offering investors returns of 1.412% after frenzied buying.

 

Portugal — which exited an international bailout programme last year — saw a dramatic 22 basis point fall in its 10-year borrowing costs to 2.34%.

Outside the eurozone’s struggling nations, German 10-year borrowing costs slid to another record low of just 0.37% ahead of Sunday’s potentially turbulent Greek election.

Investors are even willing to accept less than 1% to lend to Germany for 30 years.

One bond analyst said: “We think bond yields in the periphery nations will continue to fall, but investors are also positioning themselves for Sunday’s election. If [Greece’s Left-wing anti-austerity party] Syriza wins an outright majority, German yields will fall further.”

Greece was the only country not to see falling borrowing costs today as investors held fire ahead of the poll.

Source Article from http://www.standard.co.uk/business/business-news/super-mario-draghis-quantitative-easing-giveaway-sends-sterling-to-7year-high-9998459.html

January 24, 2015 |
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