Deflation risk and Euro area yields; Portugal is most at risk of capital flight $$

Deflation risk and Euro area yields - Gianluca Salford - Using Japan as a template, we find that deflation in Europe will cause 10Y Bund yields to fall to 1.50%. We also propose an index of deflation risk which suggests that 1) Finland and Ireland are most at risk of deflation, 2) Portugal is most at risk of capital flight, and 3) deflation will cause Irish bonds to underperform other sovereign bonds