Europe’s New Worry: Portugal

Source.The Financialist.

In July, six months after Greece elected a left-wing, anti-austerity government, the country came perilously close to leaving the euro. So it’s easy to understand why markets are nervous at the prospect of Portugal, a poster child for European austerity, replacing its reform-friendly, center-right government with a left-wing, anti-austerity coalition. The yield on 10-year Portuguese government bonds jumped 53 basis points to peak at 2.83  percent on November 9 since the ruling Social Democrats lost their majority in the Portuguese Assembly in elections held October 4. (Yields have since dropped to 2.49 percent). The stock market rose for a few days after the election, but is down nearly 4 percent since then. Despite the market’s fears, however, Credit Suisse thinks it unlikely that Portugal is destined to follow in Greece’s footsteps.



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