By James Saft
(Reuters) – Right about now might be a good time to start worrying again about European peripheral debt.
Along with just about every other risk asset the debt of the weaker members of the euro has sold off in recent weeks, hit by rising yields in higher-rated government bonds and a general pullback from bonds.
If markets regain their equilibrium that’s all it may turn out to be – a short selloff in sympathy with global markets.
Arguably few markets, however, have as much to lose from an extended market downturn as bonds from Italy, Spain, Portugal and Greece, which have a number of structural and cyclical weak points which investors for the past 10 months have been mostly happy to ignore.
Ever since Mario Draghi made his famous “whatever it takes” statement about saving the euro, and the ECB unveiled its Outright Monetary Transmission (OMT) bond purchase program, calm has returned to European markets, so much so that they have traded often times in an almost normal way, being driven by large forces outside their immediate purview, such as Fed policy.