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Portugal Bond Yield Hits Another All Time High

Tyler Durden's picture





 

Just in case someone fell for Van Rompuy's earlier joke that "the euro is a stable currency with strong fundamentals", and/or was wondering what the reason for repeating this particular lie once again was (now if we was talking about the CHF, we would certainly believe him), look no further than Portugal. The one story that nobody continues to talk about, and which will come to a head in less than 2 weeks, as Knight Capital made clear previously, continues to get little coverage, and despite hopes and dreams of some miraculous EFSF rescue mechanism (which will prove woefully inadequate once the chips start falling), spreads are leaking. Oddly enough, the ECB has not stepped in yet to shovel another €1 billion worth of decomposing sovereign bonds under the European rug. Perhaps it is time to refresh on that huge surge in borrowings under the Marginal Lending Facility, and for someone at the ECB to explain why and how this happened.

Portuguese 10 Year LT chart...

And short-term:

 


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Thu, 02/17/2011 - 10:35 | Link to Comment vote_libertaria...
vote_libertarian_party's picture

I had a dream 3-4 weeks ago that when the Portugese 10yr hit 7.5% the global meltdown would occur.

 

hmmmmmm

Thu, 02/17/2011 - 10:39 | Link to Comment Joeman34
Joeman34's picture

You're dreaming about foreign bond yields??  I kinda feel sorry for you...

Thu, 02/17/2011 - 10:41 | Link to Comment Sophist Economicus
Sophist Economicus's picture

May I suggest the playboy channel?  :)

Thu, 02/17/2011 - 11:10 | Link to Comment sheeple
sheeple's picture

what kinda gayass dream is that

Thu, 02/17/2011 - 11:25 | Link to Comment tmosley
tmosley's picture

Real world worries creep into dreams.

I had a dream where Ron Paul was assassinated one time.  The results were not pleasant.

Thu, 02/17/2011 - 11:15 | Link to Comment Joe Sixpack
Joe Sixpack's picture

I had a dream that eurobonds and dollar bonds mixed gleefully and with equal value with gold and silver. Then I woke up in Obama's nightmare.

Thu, 02/17/2011 - 11:58 | Link to Comment Matxeu
Matxeu's picture

same dream on sunday

Thu, 02/17/2011 - 10:37 | Link to Comment Sueco
Sueco's picture

The EURUSD strength in the face of a sovereign collapse in Europe is truly remarkable

Thu, 02/17/2011 - 10:54 | Link to Comment American Dreams
American Dreams's picture

Well if you believe Schultz the Port is already out of the Euro.  To much money, to many lives and to much time has been invested by to many powerful people to allow for a Euro collapse.

 

know your enemy

Thu, 02/17/2011 - 11:01 | Link to Comment firstdivision
firstdivision's picture

When both are bankrupt debt ridden circuses, it is all a matter of who has more class that rises on top.

Thu, 02/17/2011 - 11:18 | Link to Comment Joe Sixpack
Joe Sixpack's picture

"The EURUSD" RELATIVE "strength in the face of a sovereign collapse in Europe is truly remarkable"

 

Compare both to real money (gold and silver)

www.gold-silver.us/forum

Thu, 02/17/2011 - 10:37 | Link to Comment Quintus
Quintus's picture

EUR/CHF dropping hard as Euro wealth once again starts to edge towards the exit.  GBP and gold also seem to be benefiting.

While I wish no ill on the people of Europe, I am looking forward with enormous anticipation to seeing the crumpled and distressed faces of the arrogant Euro and ECB 'Elite' as the Euro dies and their grand master plan to transform all of Europe into their personal pet Empire dies along with it.  In particular, the sight of Mr. van Rompuy shuffling off to a minor administrative post in a tiny Belgian town while struggling to come to terms with his monumental failure will be very sweet indeed.

Thu, 02/17/2011 - 10:47 | Link to Comment topcallingtroll
topcallingtroll's picture

I am looking forward to permanent dollar hegemony too! Or at least ten more good years.

Thu, 02/17/2011 - 11:00 | Link to Comment Quintus
Quintus's picture

I wouldn't count on it.  The Euro and Dollar are tied at the hip via a web of connections between the financial institutions of both continents.  A crisis in the Euro will beget a crisis in European financial institutions which will lead instantaneously to a crisis on Wall St so big that even The Bernank's magic printer will not be sufficient to head it off.

If you need convincing of the importance of this interconnectedness, consider the trillions of dollars of swap lines that the Fed instantly made available to the Eurozone banks in 2008.  Ben knows that the survival of his Wall St. sugar daddies depends on avoiding a crisis in Europe.  It appears to me that this is inevitable, however.

Thu, 02/17/2011 - 11:39 | Link to Comment Sueco
Sueco's picture

If you, like me, wonder who Rompuy is, you should follow EMP Nigel Farage on youtube, his remarks in the parliament are priceless, try this one for example...

http://www.youtube.com/watch?v=bypLwI5AQvY

Thu, 02/17/2011 - 10:38 | Link to Comment morph
morph's picture

It actually hit 7.60 last week before the ECB hit the buy all button.

Thu, 02/17/2011 - 10:40 | Link to Comment RobotTrader
RobotTrader's picture

You can watch all the currency ETF's here:

http://clearstation.etrade.com/cgi-bin/bbs?post_id=9495742

As long as FXE and FXA are in uptrends, dip buying in stocks will continue to be voracious.

Thu, 02/17/2011 - 10:50 | Link to Comment homersimpson
homersimpson's picture

Yes.. voracious by Wall Street, the Fed, and any dumb gambler out there.. not exactly a plethora of demand..

Thu, 02/17/2011 - 11:04 | Link to Comment Joeman34
Joeman34's picture

Thanks for this.  I'm studying currency ETFs for a new strategy I may employ.  This is very helpful.  I don't care what they say about you on this site - you're ok in my book ;)

Thu, 02/17/2011 - 10:42 | Link to Comment PY-129-20
PY-129-20's picture

Yikes... I want my Deutsche Mark back!

Thu, 02/17/2011 - 10:44 | Link to Comment Sueco
Sueco's picture

You might have it sooner than you think...

Thu, 02/17/2011 - 11:58 | Link to Comment Ayn Rand
Ayn Rand's picture

There is no leaving the club.

Thu, 02/17/2011 - 10:44 | Link to Comment topcallingtroll
topcallingtroll's picture

A portugal blow up is more or less expected as well as the rescue. The really important thing to watch are the spreads between spanish and german bonds. If spain looks like it might need a bailout then that will be the true test of the euro.

Thu, 02/17/2011 - 10:49 | Link to Comment Dapper Dan
Dapper Dan's picture

Let's not loose focus people, keep yours eyes on the middle east.

Europe does not concern us.  If we want you to look at Europe we will have appropriate and informative news posted on the approved news sites.

That is all.

Thu, 02/17/2011 - 10:55 | Link to Comment Ponziconomy
Ponziconomy's picture

ECBLMARG <Index> <Go> on a Bloomberg near you. Hey Tyler, was that Portugal or Ireland pre-election?

Thu, 02/17/2011 - 10:59 | Link to Comment Clockwork Orange
Clockwork Orange's picture

.

Thu, 02/17/2011 - 11:19 | Link to Comment MGA_1
MGA_1's picture

So - I have a question - why do governments "need" to borrow?  Why not just run on a cash basis?  Taxes -> Expenses?  

Thu, 02/17/2011 - 11:56 | Link to Comment Ayn Rand
Ayn Rand's picture

Because they would have to tax their citizens at a rate of about 200% or so.

Politicians of all nationalities can't keep their filthy hands out of the trough.

Thu, 02/17/2011 - 11:55 | Link to Comment Catullus
Catullus's picture

Governments for the most part do account on a cash basis. When they talk about the budget deficit, they're talking about a cash deficit. They way they fill this deficit is through borrowing money. If the question is why do they need to borrow, why can't they just spend what they collect in taxes... I think a lot of people are rightfully asking the same question. Some people even consider that at the current amount borrowed, it would be nearly impossible for governments to pay back their debts even if they cut their spending to zero. Their only option at this point seems to be ensuring that the market for their debt remains liquid.

You could say they should raise taxes, but the US government alone would need to nearly double their tax receipts just get the cash deficit level back to what it was just 5 years ago. When you add the impact of the interest rate and FX swaps on what would happen if the the bond market would become less liquid, the losses are staggering. And I don't mean that for hyperbole. It literally is difficult to comprehend.

As some very astute people around here like to say: inflate or die, bitchez.

Thu, 02/17/2011 - 12:22 | Link to Comment Mike2100
Mike2100's picture

What is happening in the market is very suspicious. How can Markets comparing Portugal with Greece or Ireland, when Greece has GDP numbers like -6% per year and Ireland a public debt as high as 30%.

Portugal had a 1.4% GDP last year and this year even with all turmoil the number could well be above 0% or a residual drop.

The last 2010 quarter is showing that GDP will not be the forecasting numbers of -1.5% that some gurus area saying.
I am a Capital Market believer but these moves is telling me to start not to trust in the markets so easily.
The views from some Gurus forecasting about Portuguese economy are suspicious or a huge lack of the real economy motivation and Portugal can't pay this yield levels much longer.
I invite all to start reading the numbers without second thoughts and to do the final comparison with Greece or Ireland.

Lusitaniae Habilitas

Thu, 02/17/2011 - 12:45 | Link to Comment alexdg
alexdg's picture

What say you?

 

Dude, wake up and smell the coffee. The Government ran the economy into the ground with elephant sized deficits year after year. You think things can actually get fixed in just 1 year?! What was the deficit for Portugal in 2010 anyways? Ahhh... still a mystery right? Hasn't been published. So much for transparency and giving the market the information it needs to keep the credit tap open.

 

Just yesterday the Portuguese Central Bank Governor admitted that the economy is in recession; GDP growth for Q4'10 was negative and the same is expected for Q1'11.

 

Game over! Kick those clowns out and put some new ones that actually have a plan and will reform your socialist disfunctional constitution!

Thu, 02/17/2011 - 12:59 | Link to Comment Mike2100
Mike2100's picture

The Portuguese Central Bank is very well known in Portugal to fail every single forecast.

in 2009 they forecast Portugal's GDP to be 0.3% and the number was 1.4%.

I have my own numbers, and Portugal's GDP Will be around 0%

He can't say Portugal is in recession with only last 2010 quarter to be -0.3%

No WAY!

About Public debt, it will be around 82% or less.

You guys don't know the traditional Portuguese "Desenrascanco" it is a word with no translation, but means that Portuguese have always a solution to all problems

Thu, 02/17/2011 - 13:08 | Link to Comment Vampyroteuthis ...
Vampyroteuthis infernalis's picture

If that was true, the Portuguese Empire would still rule the world and we all would be speaking Portuguese. Whatever! I am calling you out on this one.

Thu, 02/17/2011 - 13:18 | Link to Comment Mike2100
Mike2100's picture

Empires come and go, all them. Read the books!!

Portugal was a country with 1.2 million people in 1500 and with people for next decades in Several African Places, Brazil and others South American spots, Oman, India, Japan, China, Malaysia, Indonesia and Australia too but it seems the kangaroos scare the hell out of them. ;-)

Now you see what "Desenrascanco" means!!

Thu, 02/17/2011 - 13:17 | Link to Comment Non Passaran
Non Passaran's picture

Desenrascanco - sounds good.

I think the solution is a bail-out (or default), but let's revisit this comment of yours 3 months from now and see if I will have been right.

Thu, 02/17/2011 - 13:13 | Link to Comment Mike2100
Mike2100's picture

Let me give you some data about Portuguese economy :

- Portugal do not have neither had a real estate bubble.

- Portuguese banks are financially strong and for example in better shape that in Spain

- The trend for Portuguese exports are very strong, right now. recently we had in Portugal the biggest export congress where we could see the mentality and capacity emerging from Portuguese companies : In Portuguese see all info here - http://www.portugalglobal.pt/PT/geral/Paginas/PROGRAMADOCONGRESSODASEXPO... you will have access to PDF files from some companies with presentations and numbers.

- Look out for some clusters in very near future in Portugal, like Renewable Energy and all related to that like EV and mobility grids.

- Watch out Portugal Fresh and agriculture branding, Tourism in Douro Valley, start-ups from Portugal see more info here : http://lusitanaehabilitas.blogspot.com/

- I know Americans have a very tenuous idea about what Portugal is, I have a blog visited priority by Americans to show all areas about my country.

I like to say : It's free to acquire knowledge freely

Thu, 02/17/2011 - 13:15 | Link to Comment Non Passaran
Non Passaran's picture

Well, it's pretty high up on this list of countries by public debt:
http://en.wikipedia.org/wiki/List_of_sovereign_states_by_public_debt

Thu, 02/17/2011 - 15:36 | Link to Comment TheGreatPonzi
TheGreatPonzi's picture

A Portuguese named "Mike"? 

Just saying. 

But admitting you're really Portuguese, I agree that there is no big real estate bubble in Portugal -- contrary to your neighbor. The main problem is your sovereign debt and all things attached (reinsurers, etc.)

Thu, 02/17/2011 - 15:48 | Link to Comment Mike2100
Mike2100's picture

What's your problem! My name or what I am writing.

The sovereign debt is getting worst because this very suspicious high yields.Period!!

The markets should read the numbers correctly and give a right rate to that numbers.

Are markets reflecting all data from Portuguese economy? NO
2010 GDP for Greece -6%
2010 GDP from Portugal 1.4%
See Public Debt from Belgium and Italy and compare with Portugal
See Export dynamic From Portugal and from Spain

and much more....

Thu, 02/17/2011 - 13:28 | Link to Comment Mike2100
Mike2100's picture

Only if the opposition party delivers Portugal to IMF I see a bailout, with Socrates as PM, all world can shout the word "BAILOUT" and you guys will see the little power of Portugal.

STAY TUNED!!

Too many variables at stake, next 25 days will be crucial, then Bailout are over.

I remember lot of people saying that Portuguese bailout would be x days after reaching 7% lol

Thu, 02/17/2011 - 15:58 | Link to Comment automato
automato's picture

I have spent many years working and living in Asia. Even to this day the average family hoards the same things for their SHTF fund. The big 3 are Gold, Silver, and US DOLLARS!!

Even in China. The more well-off add Land, Real Estate, expensive cognacs and more US DOLLARS. NOT reminbi! When I ask why the response is always the same. It is the only country they trust because the US is the only true democracy in their opinion.

Do NOT follow this link or you will be banned from the site!