Wednesday, February 17, 2016

Global Debt Contagion Spreading Outward From Europe #Debtcrisis

Portugal, the forgotten, struggling EU member, highlights the limits of QE. It's likely Europe's controversial bail-in program will be tested soon. Will the public willingly accept a 10% haircut on their deposits to support the failures of socialism? The inability of the Euro to rally behind broader bullish trends, a sign of weakness (SOW), suggests not (see latest Review of Euro). Signs of a global debt contagion spreading outward from Europe will become more obvious as time passes. The majority is not prepared.

Headline: Portugal Shows QE Limits as Euro Bond Rebound Leaves It Behind

Portugal just can’t shake off its bears. The nation’s bonds are underperforming their counterparts across the euro area even as a recovery in stocks and oil prices boosted demand for higher-yielding assets.

The extra yield, or spread, that investors get for holding Portuguese 10-year bonds instead of the benchmark German bund climbed for the first time in four days. The country’s two-year note yields are more than 1 percentage point higher than those in neighboring Spain, whose leaders have been unable to form a government after inconclusive elections in December.



Market-driven money flow, trend, and intermarket analysis is provided by an Insights key.