Asian shares have this morning followed European and US markets, which both fell considerably yesterday, as a global sell-off in the bond market spread to shares.

The fall is being driven by fears the post-crisis era of easy access to credit is coming to an end, and that interest rates are set to rise.

It also follows recent remarks by the heads of a number of Central Banks, including the ECB's Mario Draghi, convincing investors historically-low interest rates and large-scale central bank bond buying will soon end.

Managing Director of Treasury Solutions John Finn said once quantitative easing policies are reversed, money in the market will get shorter in supply.

"They have pumped billions and billions and billions into the market but what it really means is that interest rates tend to start increasing as the supply of money gets curbed, because it’s supply and demand."


On the future strength of the euro, Mr Finn said: "For the summer I thought we would see 1.15 for euro-dollar and about 90p for euro-sterling.

"I have to admit I didn’t think the dollar would rise this quickly. We’ve seen it at 114.30 yesterday and it’s risen two and a half cents already.

"So I certainly think 1.15 in the short term is easily done for the dollar, I mean it’s been one-way traffic for the year.

"Sterling, we’ve got to watch it because it’s tried twice to break through 88 pence in the first quarter of the year and it’s failed.

"Now it’s actually broken through it and hovered around it for the last week or two. If it sustains it above 88 pence, we’re going to see it at 90p".

On the timing of interest rate rises, the MD of Treasury Solutions doesn’t think short-term rates will rise too quickly.

"The ECB are unlikely to do anything until 2019, so that is good news for tracker mortgage holders.

"The cost of borrowing short-term ... that will rise slightly, but at the moment it’s negative anyway so I don’t see that being a major problem.

"Where I think Irish corporates need to watch it is longer term rates... They tend to rise before short-term rates ever increase. So, generally the cost of fixing that will rise 6-9 months before the ECB does anything."

Mr Finn added: "You could easily see fixed rates rising 1%/1.5% possibly before the ECB does anything.

"To put that in context, if you’re borrowing at a cost of 3% at the minute, a 1% rise in interest rates – which isn’t huge – would actually increase your interest bill by one third. And it’s the effect of that proportionally that Irish companies have got to watch."

MORNING BRIEFS:

Dublin property group Marlet and M&G Investments has hired the estate agent CBRE to sell a new office block development on the site of the former An Post sorting depot in Dublin's South Docklands.

The Sorting Office, as it's being promoted, will be more than 200,000 sq feet, with office accommodation split over eight levels, and it will include room for 26 cars and 318 bicycles.

The building will go on the market for more than €152 million, which equates to around €750 per square foot on the basis of vacant possession, but it's likely a number of pre-lets will be agreed before the sale is completed, which would drive the price higher.

Construction of the site is expected to be completed in the third quarter of 2019.

And the sale would represent a considerable return for Marlet and M&G, as it acquired the site from An Post in 2015 for around €40 million.

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Asian shares have this morning followed European and US markets, which both fell considerably yesterday, as a global sell-off in the bond market spread to shares.

The drop is being driven by fears the post-crisis era of easy money is coming to an end, and interest rates are set to rise.

Recent remarks by the heads of a number of Central Banks, including the ECB's Mario Draghi, have convinced investors the period of historically-low interest rates and unprecedented central bank bond buying will soon come to an end.

Yesterday a bond market sell-off reached stocks, triggering the worst one-day drop in European shares seen since September, and the biggest fall for the US S&P 500 in more than a month.

This morning, Asian markets have followed suit, with Tokyo's main index 1% lower, heading for its worst day in more than two months. 

Hong Kong and Sydney's main markets also dropped more than 1%.

Fears of tighter monetary policy have also weakened the dollar and pushed yields on 10-year Treasuries near a one-month high.