[T]ake a look at the spread between Portuguese and German 10-year bonds Monday morning. According to data from Tradeweb, the spread has widened about 25 basis points, or 0.25 percentage points. Granted, that’s still less than Greece, which has widened 75 basis points, or 0.75 percentage points. But the spread of Portugal versus German 10-year bonds has widened more than 80 basis points over the last two weeks. The yield on the Portuguese 10-year has risen 4.28% on April 12, to 5.3% Monday, making it more expensive for Portugal to borrow. The yield on shorter term Portuguese debt is rising fast too, which is not a good sign.
Of course, this all goes back to the fact that the markets didn’t believe that Greece could figure its way out of its problems on its own. “We have argued for some time that the activation of the EMU/IMF package would add more uncertainties to already fragile markets. First, Greece asking for the package is a sign of failure as private funds failed to finance the ever bigger Greek deficit. The failure to fund Greece by non-official funds has put the focus on other peripheral countries such as Portugal,” wrote BNP Paribas currency analysts Monday.