Markets are rallying today, and yields are down for peripheral countries, but markets are throwing Portugal to the wolves.
Check out this chart of the Portuguese 2-year, which is up again today.
Now here’s something that might make you go hmm…
Portugal has a tiny economy, but the one country that’s overwhelmingly exposed to it is Spain.
And yet, here’s the Spanish 2-year. It’s pretty much making the exact opposite move of late.
Still, given the connection between the two, you have to wonder how long the market will stay not worried about contagion.