The Irish Independent newspaper warned that Ireland is close to calling in the IMF for a bailout. This report has been denied by Finance Minister Brian Lenihan who said last night, "The Government's strategy for dealing with the economic and financial challenges has been commended by the EU Commission, the ECB, and many other international experts."
Regardless of the official denials, Irish CDS hit a record high at 425 and the Irish/German 10-year spread ripped higher to 410 bps, leaving the Irish 10-year yield at around 6.5%.
Ireland is funded through 2Q11, which has eased some immediate concerns. However, Ireland is scheduled to auction 1.5B euros in bonds on Tuesday (same day that we likely disappoint a lot of folks here in the US when QE2 fails to arrive...). Demand and pricing of this auction ought to be quite telling re: investors risk appetite.
The largest concern however remains the unveiling of the cost of dealing with Anglo Irish bank which is supposed announced from Dublin sometime in early October. Estimates provided so far suggest approx 25B euros (15% of GDP).
Also of interest was PM Brian Cowen stating today that he would socialize more cautiously after appearing intoxicated on air following a party with colleagues at an annual conference. Good to know that the powers that be are maintaining clear heads!
Portugal CDS is also surging this morning as Diario de Noticias writes, "Portugal may be required to seek assistance from the IMF to address the problems of external financing."
It would seem that while nothing is imminent, the European Sovereign Debt Crisis is re-heating. Stay tuned. Euro holds above 1.30 EUR/USD.
I continue to hold various call options on the EUO (ultra short Euro).
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