We will likely know soon after 11am whether Portugal will be next to receive EU/IMF bailout money as at that time the Portuguese government will vote on adding more budget cuts to what currently exist. The opposition wants to vote no and if the budget deal fails, the Socrates government will fall and hat in hand the country will go to the EU/IMF. Investors aren’t waiting around as their 2 yr yield is jumping 12 bps to the highest since ’96. Irish yields are spiking as their 2 yr yield is up by 74 bps to above 10% as we await the stress test results on their banks on Mar 31st. Notwithstanding this and the Japanese disaster, the ECB still is intent on raising interest rates in two weeks and 3 month Euribor is rising to the highest since June ’09. Japan’s government expects the damage to total between $200-300b. The Nikkei closed lower by 1.7% after Tokyo said don’t have infants drink tap water (certainly alarming to hear) and smoke rose from reactor 3.
Clock ticking on Portugal
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