Iberian stock markets look to have seen a ghost on Wednesday afternoon:
With financials the hardest hit:
Now, there are plenty of rumours doing the rounds to explain the sell-off; an imminent downgrade of Spain’s credit ratings is one of them. Rather more implausibly there’s also chat that the ECB has asked its member states to “come clean” as it looks to bail out Greece (whatever that means).
Or perhaps the answer is simply that the sovereign debt contagion is spreading.
Whatever it is, the equity market does not like it. Nor does the bond market.
From Bloomberg:
Portuguese bonds slid, pushing the yield on the 10-year note up by the most in 11 months, on concern that the country will fail to curb its budget deficit. The decline sent the yield on the security to the highest since March, increasing the yield premium investors demand to hold the debt instead of benchmark German bunds to 144 basis points as of 2:40 p.m. in London, the widest in 10 months.
Portuguese 10-year note yields climbed 18 basis points to 4.65 percent. The 4.75 percent security due June 2019 fell 1.33, or 13.3 euros per 1,000-euro ($1,395) face amount, to 100.75. The two-year yield jumped 22 basis points to 2.43 percent.
Related links:
The un-Noticed Greek deficit – FT Alphaville
Next to the trough – FT Alphaville
Going Grεεk… – FT Alphaville