Bulls in Baghdad

The bond markets are generally considered "smarter" money than the stock markets, but all markets are expressions of collective judgments.

And times are good for Iraqi bonds:

To understand how big the appetite is for emerging market debt these days, one should look at what has been happening to prices of bonds newly issued by Iraq, a country that has suffered one of the worst economic and political upheavals in recent history.

Since the bonds started trading officially at the beginning of the week, prices have jumped from about 70 to a high of nearly 74 this week. Andrew Chappell, associate director at Exotix, the London-based broker, says: "We are still seeing a lot of demand chasing very little paper."

Prices receded to about 72 yesterday, translating to a yield of 8.95 per cent. That means investors currently perceive Iraq as having about the same credit risk as Jamaica, but as having less risk than both Ecuador and Argentina, say analysts, because the comparable bond yields on the latter two countries are higher than yields on Iraq's bond.

How about that?

Markets see Iraq as being like Jamaica.

No wonder Iraqis are so optimistic!