The cost of insuring against default on Irish and Portuguese government debt rose to records, and bond yields climbed higher today.

Swaps on Ireland jumped 34 basis points to 889 and the Markit iTraxx SovX Western Europe Index of swaps on 15 governments increased 5 to 251.

Bond yields on Irish two-year debt hit a high of 16.737 per cent, while the benchmark 10-year bond saw its yield rise to 13.020 per cent earlier today.

Contracts on Portugal climbed 17 basis points to 995, signaling a 58 per cent probability of default within five years, according to CMA prices at 2pm in London.

Swaps on Italy increased 23.5 basis points to 241, the highest level since January 11th, while Greece rose 19 to 2,169, Spain climbed 5.5 to 308 and Belgium was up 11 at 172. An increase signals deterioration in perceptions of credit quality.

The cost of insuring corporate bonds also rose after a report showed US employers added fewer workers than forecast in June. Payrolls increased by 18,000 in June, less than the 105,000 median estimate in a Bloomberg survey of economists. The unemployment rate rose to 9.2 per cent, the highest this year.

The Markit iTraxx Crossover Index of contracts linked to 40 companies with mostly high-yield credit ratings jumped 10 basis point to 420, according to JPMorgan Chase and Co.

The Markit iTraxx Europe Index of 125 companies with investment-grade ratings climbed 2.75 basis points to 111.75. The Markit iTraxx Financial Index linked to senior debt of 25 banks and insurers rose 6.5 basis points to 170 and the subordinated index increased 13 to 302.5.

A basis point on a credit-default swap protecting €10 million of debt from default for five years is equivalent to €1,000 a year. Swaps pay the buyer face value in exchange for the underlying securities or the cash equivalent should a borrower fail to adhere to its debt agreements.

Additional reporting: Bloomberg