4 Jul 2013
Flash: Portugal continued to be in focus – Danske Bank
FXstreet.com (Barcelona) - Danske Bank analysts note that political crisis looks set to return to the Eurozone after the resignation of two key Portuguese ministers earlier in the week.
However, they add that late yesterday there were signs of reconciliation, as the coalition government worked to survive. Importantly, the team note that two other ministers of the CDS party, whose leader, Foreign Minister Portas, resigned on Tuesday, will stay in government preserving the coalition. Thus, they conclude that the immediate risk of a messy election has decreased, though the recent events have clearly weakened Portugal's government. They write, “Portuguese financial assets saw continued selling pressure yesterday (10-year yields were up some 70bp, while the PSI20 index fell more than 5%).”
However, they add that late yesterday there were signs of reconciliation, as the coalition government worked to survive. Importantly, the team note that two other ministers of the CDS party, whose leader, Foreign Minister Portas, resigned on Tuesday, will stay in government preserving the coalition. Thus, they conclude that the immediate risk of a messy election has decreased, though the recent events have clearly weakened Portugal's government. They write, “Portuguese financial assets saw continued selling pressure yesterday (10-year yields were up some 70bp, while the PSI20 index fell more than 5%).”