Portuguese bonds gives up post-ECB rally facing leftist challenge

Passo Coelho, center right candidate may have become the Prime Minister of Portugal as his party secured majority of the votes but is ruling a minority government.

Left wing parties make up majority of Portugal's parliament and demonstrated their power by rejecting government's center right candidate to elect a socialist house speaker. Now they are threatening to topple the newly elected government with a motion to reject its program.

Portugal is slowly dipping into a similar crisis that of Greece. Though it may still be in budding stage, it nevertheless pose serious threat going ahead.

While European securities are enjoying honeymoon time, Portuguese ones are suffering nightmares.

Portuguese 10 year bond yield has jumped up to trade at 2.43%, close to wiping out its all post ECB gains. So far this month spread between Euro zone bonds and Portugal have widened. It could worsen further if political crisis deepens.