Markets, Business & Tech Briefing: PSI Rises 0.44% as Europe Sells Bonds, the 2027 Interest Bill Grows €776 Million, 36% of August's New Cars Were Electric

Lisbon Was One of the Few European Markets That Went Up

September opened with a bond rout, and it dragged European equities down with it. Frankfurt and Milan both lost more than a percent. Lisbon did not. The PSI closed up 0.44% at 9,478.42 points, with ten of the sixteen constituents above water, five below and BCP unchanged at 1.12 euros.

The reason is the same one that has carried this index through most of the summer: oil. Brent was up 2.3% at 92.58 dollars a barrel late in the session and West Texas Intermediate 2.8% at 88.14 dollars, after Monday's first direct exchange of strikes between the United States and Iran since late July and reports of two tankers hit leaving the Strait of Hormuz, and on a fresh escalation between the two on Tuesday. Galp went with it, and the whole energy complex followed. Altri, Teixeira Duarte, Mota-Engil, Galp and Sonae all added 1% or more. Among the heavyweights, EDP rose 0.9%, EDP Renováveis 0.8% and Jerónimo Martins 0.49%.

Everywhere else was red. The German DAX fell 1.16%, Italy's FTSE MIB 1.30% and the Stoxx 600 0.6%. The Lusa tape put Madrid's IBEX 35 down 0.75%, the Paris CAC 40 down 0.39% and London's FTSE 100 down 0.32%. It is worth being clear about what Lisbon's outperformance is and is not: it is a commodity index having a good day inside a bad one, not a vote of confidence in Portuguese assets. The same barrel that lifted Galp is what has the bond market frightened.

Portugal's Twenty-Year Yield Is Back Where It Was in 2017

The yield on Portugal's twenty-year Obrigações do Tesouro (Treasury bonds) rose more than three basis points on Tuesday to 4.2623%, the highest reading since 2017. That is a near-decade high, and it is the local expression of something global: Japanese ten-year yields touched 3% for the first time in thirty years, and long-dated European debt sold off across the board.

Portugal's move was, however, one of the milder ones. France's twenty-year yield rose 3.2 basis points to 4.7395%, its highest since 2008. Italy's added more than four to 4.779%, a three-year high. Even the German Bund, the market's shelter, went to 3.7694% at that maturity, also the highest since 2008. At ten years the divergence is starker still: Portugal sat at 3.69%, effectively unchanged on the session, while the ten-year Bund rose about four and a half basis points to 3.37%, its highest since April 2011. That leaves the spread over Germany at roughly 33 basis points, three tighter than on Monday. Portugal is being repriced by the tide, not by anything specific to Portugal.

What is driving the tide is inflation, and the reason is energy. Eurostat put euro-area inflation at 3.3% in August, up from 2.9% in July, with Portugal above the average. Markets now price the European Central Bank's deposit rate at around 2.70% by December, which implies a rise at the 9 and 10 September meeting in Berlin and a good chance of a second before the year ends. Euro-area unemployment, published the same morning, edged up to 6.4% in July, with Portugal below the average.

Portuguese mortgage holders felt the same pressure through the Euribor, which rose at all three main tenors on Tuesday. The twelve-month fixing added 0.026 points to 3.029%, its highest since September 2024. The six-month rate, which now carries 39.9% of the variable-rate stock on permanent housing loans, added 0.009 points to 2.779%. The three-month rate added 0.015 points to 2.608%, a high since January 2025. August monthly averages were 2.513%, 2.713% and 2.954% respectively, all up again on July. That is also why savings certificates stop tracking the rise this month: their base rate is capped at 2.50%, and the market has gone past it.

The euro did almost nothing. The ECB reference rate was 1.1590 dollars, against 1.1596 on Monday.

The 2027 Budget Already Owes 776 Million Euros More in Interest

All of that arrives on a desk in the Ministério das Finanças (Ministry of Finance). Its Quadro de Políticas Invariantes para 2027 (Invariant Policies Framework for 2027), a document setting out what happens to the budget balance with no new measures at all, projects that general government debt service will cost about 776 million euros more next year than this year.

The scale is worth holding still for a moment. Interest cost six billion euros in 2025. The medium-term structural plan the ministry presented in April, already written with the Middle East conflict under way, put 2026 at 6.3 billion. Add 776 million and Portugal spends more than seven billion euros next year on nothing but interest. That is very close to the 824 million the government expects to spend on the regular annual pension update, which is the comparison that makes the number legible: a single line item driven entirely by the bond market now costs about as much as raising every pension in the country.

The same framework shows measures already adopted costing 4,783 million euros in 2027 before a single new one is written. Joaquim Miranda Sarmento has roughly a month and a half before he must table the budget proposal, and negotiations in parliament will run to late November. Public debt stood at 93% of GDP in June, an increase on the end of last year that prompted Luís Montenegro to restate the 87.5% target for the end of 2026 in public. We set out that squeeze in August: the ratio falls while the bill rises, and the two are not in contradiction.

There was one piece of comfort on Tuesday, and it came from a rating agency. DBRS published scenario work on nine large euro-area sovereigns (Austria, Belgium, France, Germany, Greece, Italy, the Netherlands, Portugal and Spain) and put Portugal, Greece and Spain in the least affected group. Assuming rates stay where they are for the rest of the decade, DBRS sees interest expense between 2025 and 2030 rising 0.9 percentage points of GDP in France and 0.6 in Belgium, against 0.1 in Spain, 0.1 in Portugal and a fall of 0.2 in Greece. The agency's reasoning is not that the three borrow cheaply; it is that they grow. The IMF expects nominal GDP growth in Portugal, Greece and Spain to average 4.4% a year from 2026 to 2030, against 3.1% for the other six, and expects all three to run primary surpluses throughout. A shrinking debt stock is a smaller stock to refinance at the new rates.

Public Debt Fell 7.6 Billion Euros in July, and Almost None of It Was Deleveraging

The Banco de Portugal (Bank of Portugal) published July's debt figures on Tuesday morning, and the headline is a fall of about 7.6 billion euros to 286.3 billion, the lowest since March. The explanation is a single date. A ten-year Treasury bond issued in 2016 matured on 21 July, and the IGCP repaid holders almost 9.3 billion euros. Long-term debt securities fell 8.3 billion as a result.

Read past the headline and the picture flattens out. General government deposits fell 7.3 billion euros to 24.1 billion over the same month, because that is where the repayment money came from. Net of deposits, debt fell 0.2 billion euros, to 262.2 billion. The gross number moved because a large cheque cleared, not because the state owes materially less. Deposit liabilities actually rose by a billion, which the central bank attributes mostly to households buying savings certificates. Portugal's second-quarter ratio was 92.9% of GDP, and June's 93% took it higher still.

Collective Redundancies Hit Their Highest Since the Pandemic, but Fewer People Lost Their Jobs

Companies notified 375 collective redundancy procedures in the first seven months of 2026, according to figures released by the Direção-Geral do Emprego e das Relações de Trabalho (Directorate-General for Employment and Labour Relations). That is about 13% more than a year earlier and the highest count for the period since 2020, when the pandemic produced 420. The run of comparable years reads 332 in 2025, 293 in 2024, 221 in 2023, 178 in 2022 and 230 in 2021, so this is a trend rather than a spike.

The count of procedures and the count of people move in opposite directions, and the second number is the more reassuring one. Workers covered by collective redundancies fell 9.3% to 4,250, and those actually dismissed fell 11.4% to 4,055, from 4,578 in the same period of 2025. In July alone, 624 people were dismissed, against 781 a year earlier and 661 in June. What is happening is that more, smaller employers are cutting: 105 of the procedures came from micro firms and 174 from small ones, against 68 from medium companies and 28 from large ones.

Geographically it is concentrated. Lisbon and the Tagus Valley accounted for 221 of the procedures, the North 104, the Centre 36, and the Alentejo and the Algarve seven each. In July, 391 of the 624 dismissals (63%) were in Lisbon and the Tagus Valley, and manufacturing was the sector losing the most people, which sits uncomfortably alongside industrial output falling for a third straight month in July. Across all the procedures, 78% were justified by workforce reduction, 14% by permanent closure and 8% by shutting one or more sections. None of this has yet shown up in the headline rate, which most recently printed at 5.3%, its lowest since 2011.

More Than a Third of August's New Cars Were Electric

ACAP, the Portuguese automobile association, put 197,632 new vehicles on the road in the first eight months of the year, 10.3% more than in the same period of 2025. August alone delivered 17,209 registrations, a gain of 11.3% against an 8.6% rise in July, so the market is accelerating rather than levelling off. Passenger cars account for 169,323 units year to date, up 9.5%; light commercial vehicles rose 21.8% in August to 2,449 and 9.8% cumulatively to 22,299.

The electrification numbers are the ones that have moved. Fully electric cars were 26.8% of new passenger registrations across the eight months, but 36% in August alone. Add hybrids and other alternative powertrains and 75.6% of new passenger cars year to date run on something other than petrol or diesel alone; petrol-only cars are down to 20.8% of the market and diesel to 3.6%. When we reported the July tape a month ago, electrics were taking a quarter of the market. August took better than a third.

The Peugeot 2008 remains the best-selling model with 3.21% of new cars sold to August, down from 3.72% last year, followed by the Peugeot 208 and the Citroën C3. The best-selling Tesla sits fourth, on 3,719 registrations against 2,889 in the same period of 2025.

Also Moving: Continente's AI Programme, Mota-Engil's Biomethane, Brussels on REN

MC puts half a million euros into training 4,000 people on AI. The Sonae food retail arm that owns Continente told newsrooms on Tuesday that it is running Enterprise AI Adoption, a modular e-learning programme built off an assessment answered by four thousand employees and rolled out in phases. The investment is about 500,000 euros, and the company estimates the tools will save roughly 100,000 working hours over a year across meetings, document summarisation, research automation and inventory validation. Context for the ambition: a recent ECB study found AI is already used by more than half of workers at euro-area firms, but that the productivity effect remains uneven and adoption is held back by doubts over reliability and by a lack of employer support.

Crédito Agrícola funds 25 million euros of Mota-Engil biomethane. Mota-Engil Ambiente e Energia, the group's waste, urban cleaning and energy transition arm, said it has secured 25 million euros of bank financing from Crédito Agrícola to build five renewable biomethane production units in Coimbra and Aveiro. The company, led by Hugo Pereira, says the project will deliver the first at-scale injection of biomethane into the Rede Nacional de Gás (National Gas Network). It follows the wave of biomethane projects now working through planning, including the 20.5 million euro plant at Mares that drew local objections last week.

Brussels raised no objection to the state buying back into REN. Maria da Graça Carvalho, the energy minister, told Portuguese journalists in Brussels after meeting Céline Gauer of the Commission's energy directorate that the state's return to the shareholder register of Redes Energéticas Nacionais (National Energy Networks) "was very well understood." Her argument was structural: among the transmission system operators in the European network, Portugal's was the only one that was completely private, and 18 of the 40 transmission companies across 34 European countries are wholly public, Denmark, Sweden and Norway among them. The state is buying 13.7% from Pontegadea through Parpública, reversing the 2014 exit. The minister declined to discuss price, financing, any future increase or board representation, noting that REN is a listed company and that the operation was run confidentially. It still needs prior review by the Tribunal de Contas (Court of Auditors) and an opinion from ERSE.

REN's own grid data set a record on both sides. Electricity consumption rose 3.1% between January and August, and 1.2% in August alone (2.2% adjusted for temperature and working days). Solar reached a new power peak of about 3,850 MW during August on the back of installed capacity, even though conditions were poor: productivity indices were 0.87 for wind and 0.82 for solar against a historical average of 1. Renewables covered 52% of August consumption, non-renewables 12% and imports the remaining 36%, with imports hitting a new high above 5,200 MW after the reinforced interconnection with Spain. Over eight months the mix is 66% renewable (hydro 25%, wind 23%, solar 13%, biomass 5%), 14% natural gas and 20% net imports. All Portuguese gas came through the Sines LNG terminal, sourced 57% from Nigeria, 31% from the United States, 6% from Russia and the remaining 6% through the interconnection with Spain.

Tomorrow

Parpública delivered its report on the TAP bids to the finance and infrastructure ministries on Tuesday, as scheduled, comparing the binding offers Air France-KLM and Lufthansa submitted on 29 July for the 44.5% direct sale, with a further 5% reserved for employees and up to 49.99% on the table in total. The report ranks the two on absolute and relative merit; the choice itself now belongs to the Council of Ministers, which has no fixed deadline. Watch for a Council of Ministers agenda item rather than a leak, and read it against the 99.2 million euro half-year loss the airline disclosed on Monday.

Otherwise the calendar is thin and the bond market is not. With Brent above 92 dollars, euro-area inflation at 3.3% and an ECB meeting eight days away, the next move in Portuguese yields is likely to be made in Berlin and Tehran rather than in Lisbon. Galp remains the swing factor in an index that keeps being rescued by the same problem that is making the state's borrowing more expensive.