Portugal’s debt interest at two-month highs. Italy close to 4%

  • ECO News
  • 1 September 2022

The pressure on the periphery of the Eurozone is intensifying again, on the eve of the ECB's interest rate hike.

The periphery of the Eurozone is under pressure, with the European Central Bank (ECB) on the eve of raising again the reference interest rates in the region. The interest rate on Portugal’s 10-year bonds is up for the fifth session and has reached a two-month high. The Italian interest rate also increased and is once again close to surpassing 4%.

The last time Italy breached this threshold in June, the ECB held an emergency meeting to curb investor mistrust and announced an anti-fragmentation tool to prevent spreads from getting out of control. This Thursday, the interest rate on Italy’s 10-year bonds rose to 3.986%, the highest level since June 14.

The yield on Portuguese 10-year bonds increases for the fifth session, now reaching 2.722%, a maximum since June 21. The same happened with the Spanish bonds, which stand at 2.806%.

The ECB meets in a week and investors are betting on a 75 basis point rate hike, already after the 50-point increase announced in July. The tightening of financial conditions is justified by inflationary pressure.