Portuguese Bonds Struggle to Shake Off Peripheral Bad-Boy Image
- Economy is on a solid path, public sector debt is declining
- Systemic crisis would hit the country via sentiment/growth
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Since it has become clear that Italy’s government will comprise the anti-establishment Five-Star Movement and anti-immigrant League, there has been negative pressure, not only on Italian bonds. Their peripherals peers of Spain and Portugal aren’t totally immune from the decline either.
With the publication of the populist coalition’s program, the dynamics of higher yields has continued almost unabated, apart from short breathers. At the same time, it has become evident in recent weeks that the Spanish bond market is better able to escape this trend than Portugal’s. This could be due, among other things, to the fact that Spain is seen as a semi-core investment, according to DWS.