I have been keeping a close eye on Portuguese notes expiring in September 2013 for the past several months. Today, that yield has fallen to the lowest since May.
This expiration seems to be the flash-point for problems as yields on debt expiring 7 months earlier are at a relatively healthy 4.03%.
The spread between these maturities in January was 1300 basis points, six weeks ago it was around 800 bps but today has narrowed to less than 600 bps. The parallel firewall talk has been the catalyst today for the fall in peripheral yields with Portuguese 10s down 36 bps to 12.2%. That’s still high up in the danger zone but it’s moving in the right direction.
