Investors have been focused on Spain this morning, but there’s one crisis that’s still flying under the radar: Portugal.
Yields on two-year notes there are up nearly 30 bps today at 8.3 per cent, after a long trend downwards from over 20 per cent in late January.
So why aren’t investors more concerned?
Spain and Greece present the far more immediate concerns, as Portugal—which is already on a bailout program—is not expected to exhaust its current resources until 2013. That said, Portugal’s debt and growth problems appear to be fundamentally more serious than Spain’s; the country has already received international aid and EU notables have already advocated preparing for a second bailout.
However, recent concerns about Spanish banks, which have large investments in the Portuguese economy, could also begin affecting Portugal.
Check out yields on two-year notes over the last six months: