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All eyes on Portugal and other Med members
Ahead of Wednesday’s bond auction in Portugal – an important litmus test as to whether the country can actually fund itself – Portugal’s 10-year government bond yields increased to more than 7%. As shown in the graphs below, it took Greece and Ireland less than a month to request EU/IMF aid after their 10-year bond yields had breached the all-important 7% level, reported FT Alphaville (via Evolution Securities). However, Portugal has been flirting with the 7% barrier a number of times before without triggering a rescue package, yet. According to David Rosenberg (Gluskin Sheff & Partners), credit default swaps indicate a 44% chance of Portugal defaulting. Greece Ireland Portugal Source: FT Alphaville, January 10, 2011. Meanwhile, the stock markets indices of the debt-ridden PIIGS countries tell their own story. These markets belong to a small handful that trade below their key 200-day moving averages. Needless to say, the benchmark indices all underperform the Dow Jones World Index by miles (bottom section of each of the charts below). Portugal Source: StockCharts.com Italy Source: StockCharts.com Ireland Source: StockCharts.com Greece Source: StockCharts.com Spain Source: StockCharts.com | |||||||||||
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