The Portugal's 10-year bond yields declined Tuesday to 1-month low on alleviation that the danger of a slice to the nation's lone remaining investment grade rating has blurred for now. Also, tumbling crude oil prices drove investors towards safe-haven assets. The yield on the benchmark 10-year bonds, which moves inversely to its price, fell 1.31 pct to 3.086 pct by 1100 GMT.
The DBRS confirms Portugal's investment-grade rating with a stable outlook to BBB (low) on Friday. This is as investors expected and will permit its bonds to continue to be purchased by the ECB.
"DBRS not only kept Portugal's rating unchanged but left the outlook unchanged too, so the risk of a downgrade is fading and that's why we are seeing an outperformance of Portuguese debt," said BNP Paribas European rate strategist Patrick Jacq to Reuters.
In addition, the Portuguese bonds have been closely following developments in oil markets because of their impact on inflation expectations, which are well below the European Central Bank's target. Today, crude oil prices tumbled by snapping 6-month high as rising production in the Middle East outweighed a decline in U.S. output and a recent slide in the dollar, which has been supporting crude. OPEC supplies rose to 32.64 million barrels per day in April, from 32.47 million barrels per day in March, according to a Reuters survey. That almost matches January's 32.65 million barrel per day, when Indonesia's return to OPEC boosted production to the highest since at least 1997. The International benchmark Brent futures fell 0.46 pct to $45.62 and West Texas Intermediate (WTI) tumbled 0.89 pct to $44.38 by 0930 GMT.
Meanwhile, The PSI 20 fell 1.80 pct or 91.31 points to 4,995 by 1100 GMT.
