This morning, the EU announced that it stands by Greece’s new budget.
Great, maybe that will give investors confidence that they don’t have to worry about Greece actually missing a payment.
But now there’s a new loser: Portugal. It’s the weak link for Europe to throw to the wolves.
Yields on 10-year Portuguese bonds jumped 21 basis points yesterday as funds switched their fire to the next “domino”, questioning whether the government of Jose Socrates can deliver spending cuts without a parliamentary majority. “The lightning rod has been passed to Portugal: who is next – Spain?” asked Marc Chandler, from Brown Brothers Harriman.