Put down that cup of tea…

Irish bonds are at a new record high (6.250). Really should be watching closely today.

Update: Oh dear, AIB.

Update II: Alphaville again.

Update III: Alphaville again, again. See quote below.

Update IV: Record closing high today, having reached record trading high. Now lead story on FT.com. ECB intervened to prop us up. If you can’t access the story at that link head to Google and search “Irish bonds fall on bail-out fears”, then click through.

If the Irish real estate crash goes on, and the recovery rates on bank assets weaken – the Irish state is vulnerable because it’s pegged its support to certain levels of recovery in bank assets.

It’s a very uncertain process — but a dangerous one, because the extent of the bank rescue so far doesn’t give the Irish government much more room in 2011. So when you see things like this from the IMF on the wires:

RTRS-IRISH AUTHORITIES CONTINUING SUPPORT FOR BANKING SYSTEM HELPS MAINTAIN FINANCIAL STABILITY- IMF SPOKESPERSONRTRS-IRISH AUTHORITIES CONTINUING SUPPORT FOR BANKING SYSTEM HELPS MAINTAIN FINANCIAL STABILITY- IMF SPOKESPERSON

Know that this ‘continuing support’ is the entire problem.

Stuff you might find interesting to watch

Bloomberg; Irish ten year bond graph.

(Here’s the last year. See that high, team?)

This Property Pin Thread.

Comment on Twitter; Bondwatch. Ciara O’Brien of the Irish Times Online Business Desk.

And maybe the reasons why it kicked off? Alphaville picked up on this Barclay’s report (with the headline ‘Irish Government debt needs you’), which was then picked up by Zerohedge (‘Ireland Negotiating With Bondholders Over Anglo Irish Default, As Country Prepares To Call In IMF’) and the national papers this morning. Resulting in negative sentiment and ‘Irish panic‘.

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Of course these new record highs are simply part of the ebbs and flows of the markets. Aren’t they?

Eek.