BOND MARKETS 'OVER REACTING' TO IRISH SITUATION - This week we heard from Central Bank Governor Professor Patrick Honohan, who is travelling in Asia, that the cost of rescuing Irish Nationwide will be over €3 billion. That is a 20% increase in the capital cost of rescuing the building society. It comes after last week's upwards revision of the estimate of the cost of rescuing Anglo Irish Bank - when we heard from the European Commission that it approved Government plans to inject additional money into the bank. At the same time the NTMA was getting ready to auction various bonds, which it did so on Tuesday, at a slightly lower cost that at last month's auction.
Douglas McWilliams of London's Centre for Economic and Business Research says that the bonds market was guilty of making the same mistakes as some European politicians in thinking that all euro zone countries and their problems are the same. He says the Irish economic situation is much less severe than that in Greece and Spain and says that the bonds market over reacted. However, he adds that at the end of the day, the international investors still oversubscribed to this week's Irish bond auction.
On AIB and Bank of Ireland's plans to raise capital, Mr McWilliams says that markets seemed to have calmed down quite a lot, and provided that no new 'nasties' suddenly emerge, he is confident the two banks should do alright.
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GOOD NEWS FOR STUDENTS PAYING RENTS - Rents fell by less than 1% across the country between the months of April and June, according to the latest report from property website Daft.ie. Its report shows that the year on year fall in rents is now at its slowest pace in two years, suggesting that the rental market may be close to stabilising. But the total stock of properties available to rent remains high, meaning it is unlikely that rents will rise sharply in the near future.
Ronan Lyon's, Daft.ie's economist, says the figures are good news for students. He points out that students who started their third level education in 2007 are now seeing a 40% fall in rents. He says there is a lot of choice of accommodation out there, with about 20,000 properties available for renting.
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MORNING BRIEFS - General Motors has taken steps towards an initial public offering, expected to be the second largest share sale in US history. The car firm, which is 61% owned by the US government, has officially filed its proposals with the Securities and Exchange Commission. The move begins the timetable for the IPO, which analysts believe will raise between $12-16 billion. It means the US Treasury can start to sell part of the stake it took after a $50 billion bail-out. The share sale is expected to take place later this year. The biggest ever US IPO was Visa's 2008 flotation that raised $19.7 billIon.
*** US President Barack Obama has said an over-supply of homes is hindering the US economic recovery. Mr Obama also said the US had to find a way to curb its budget deficit without further slowing economic growth. The American president said that a glut in the housing market was partly responsible for the slow economic recovery.
*** On the currency markets this morning, the euro is trading at $1.2811 cents and 82.27 pence sterling.
