Portugal's bond yields have risen after its constitutional court rejected a bill that would have allowed public sector workers to be fired.
Portugal’s bond yields have risen after its constitutional court rejected a bill that would have allowed public sector workers to be fired.
As Reuters reports, the move was a blow to the austerity programme set out under Lisbon’s bailout, as the bill was considered important because of its potential longer-term structural effect on spending cuts.
The ruling alarmed investors as it suggested the court could throw out more of the government’s planned savings measures.
Portuguese bonds have been relatively stable this month after a political crisis fuelled a sharp sell-off in July which took 10-year yields above 8% .
“This was a measure which was implying some sort of saving for the government … so basically it is credit-negative for Portugal,” one trader reportedly told Reuters.
Ten-year yields rose 15 basis points on the day to 6.82%, while two-year yields rose 21 bps to 5.44%.