Portuguese yields are up 12 basis points today as news comes out that one of it’s biggest financial firms looks set to miss payments on some short term paper. Espirito Santo Financial Group are the biggest shareholder of Banco Espirito Santo, Portugal’s largest bank, and their shares fell as much as 11% today.

Bond yields have bounced from the 3.2% lows back towards 4.0%

Portuguese 10 year bond yields 09 07 2014

Portuguese 10 year bond yields 09 07 2014

For all the proclamations that Europe is exiting the crisis this is a timely reminder that there’s still plenty of problems bubbling under the surface which will keep a premium in bond yields

A yield of 3.5-4% in a European country backed by the ECB, with 0.5% inflation is still going to be a tasty proposition for the yield chasers.