3 Jul 2013
Portuguese bond yields rise sharply amid political instability
FXstreet.com (Barcelona) - The political turmoil in Portugal continues on Wednesday, with more ministers rumored to be preparing their resignations after Finance Minister Vitor Gaspar and Foreign Minister Paulo Portas stepped down earlier this week.
Even though the Portuguese PM Pedro Passos Coelho assured yesterday that he would not follow in their footsteps and that he would not “resign or abandon” his country, Portuguese 10-year bond yields crossed the important psychological threshold of 7% (up from below 6.5% this Monday) and are quickly rising, currently at 8%. Portuguese stocks tumbled 5.6% on Wednesday morning.
According to reports in the Portuguese media Agriculture Minister Assuncao Cristas and Social Security Minister Pedro Mota Soares could step down later today.
Nevertheless, Jane Foley, Senior Currency Strategist at Rabobank does not expect the jitters in Portugal to affect the euro considerably: “It seems that while the EUR is still vulnerable its sensitivity to peripheral politics does appear to have dropped. While the news from Portugal is negative, we expect that the EUR can continue to show signs of resilience over the weeks ahead.”
Even though the Portuguese PM Pedro Passos Coelho assured yesterday that he would not follow in their footsteps and that he would not “resign or abandon” his country, Portuguese 10-year bond yields crossed the important psychological threshold of 7% (up from below 6.5% this Monday) and are quickly rising, currently at 8%. Portuguese stocks tumbled 5.6% on Wednesday morning.
According to reports in the Portuguese media Agriculture Minister Assuncao Cristas and Social Security Minister Pedro Mota Soares could step down later today.
Nevertheless, Jane Foley, Senior Currency Strategist at Rabobank does not expect the jitters in Portugal to affect the euro considerably: “It seems that while the EUR is still vulnerable its sensitivity to peripheral politics does appear to have dropped. While the news from Portugal is negative, we expect that the EUR can continue to show signs of resilience over the weeks ahead.”