European Markets Continue to Decline

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July 10 (Bloomberg) -- Bloomberg’s Guy Johnson examines European markets and stocks continue to decline. He speaks with Adam Johnson and Brendan Greeley on “Bloomberg Surveillance.” (Source: Bloomberg)

Happening in europe.

Our futures were only down about a third of a percent and now a focal sent.

Guy johnson in london, maybe you can help us understand what is happening.

From what we told is started in portugal and has spread because of lack of bond payments.

What is happening here is the parent company of one of portugal's biggest banks missed a payment to a few of its clients and the ripple effect is substantial.

What we're seeing here today as a wake-up call, a realization that the european bond trade is not a one-way bet.

Every buddy has been driving -- everybody has been driving european bonds higher and higher, yields lower lower.

There is a credit risk out there in europe, and the banks -- we have a big stress test coming out.

This may be a little bit of a warning in advance of that that maybe all is not well.

Guy, i'm wondering if you can confirm for me a teeny tiny ray of sunshine, that italian, portuguese, and greek spreads are growing.

I'm not seeing ireland in there.

I think what we are getting here is realization that the baby doesn't get thrown out with the bathwater.

We are seeing investors differentiating the credit risk or the rate risk associated with these countries.

It is the southern european countries that are really under pressure.

You're seeing a flight to quality.

We have the 10 year german with a 1.7 handle.

I have not seen a flight to quality in a couple years but there, i've said it.

There is a strong differentiation being exhibited in the market reaction to what we are seeing.

Guy johnson, well put.

A wake-up call, there is credit risk out there.

Thanks for your perspective.

We appreciate it.

The s&p and nasdaq have

This text has been automatically generated. It may not be 100% accurate.

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