4 Jul 2013
Portuguese crisis eases as government talks continue
FXstreet.com (Barcelona) - Following yesterday's dramatic drop in Portugal's bond yields and a fall in European stocks, both are seen recovering on Thursday.
Crisis talks between the Portuguese government and the junior coalition partner (CDS) last night resulted in the latter announcing that there would be no more ministers' resignations. PM Pedro Passos Coelho will continue negotiations today in order to reach an agreement to keep the coalition together. The leader of CDS Paulo Portas signalized that in exchange for support the party should be given more influence on government policy.
Portuguese 10-year bond yields fell to 7.24% this morning after soaring to over 8% on Wednesday. European stocks are also rebounding and Spain and France managed to sell debt without seeing an excessive rise in their borrowing costs, which suggests limited contagion from the Portuguese crisis.
Jim Reid from Deutsche Bank comments: “The events in Portugal are a poignant reminder that markets remain at the mercy of authorities, of which the latter have yet to find the solution to weak growth. This is unlikely to be the last political problem in Europe over the next few years.”
Crisis talks between the Portuguese government and the junior coalition partner (CDS) last night resulted in the latter announcing that there would be no more ministers' resignations. PM Pedro Passos Coelho will continue negotiations today in order to reach an agreement to keep the coalition together. The leader of CDS Paulo Portas signalized that in exchange for support the party should be given more influence on government policy.
Portuguese 10-year bond yields fell to 7.24% this morning after soaring to over 8% on Wednesday. European stocks are also rebounding and Spain and France managed to sell debt without seeing an excessive rise in their borrowing costs, which suggests limited contagion from the Portuguese crisis.
Jim Reid from Deutsche Bank comments: “The events in Portugal are a poignant reminder that markets remain at the mercy of authorities, of which the latter have yet to find the solution to weak growth. This is unlikely to be the last political problem in Europe over the next few years.”