Treasuries bounce but not on deal

Treasuries are rallying well off their lows with the 10 yr in particular now flat on the day and the 30 yr bond yield up just 4 bps. I haven’t seen anything new on the US debt ceiling to account for it and I believe its more in response to selling in European sovereign debt. The Italian 2 yr yield is up by 36 bps and back above 4% for the 1st time since last Tuesday and the Spanish 2 yr is also back above 4%. Italian bank stocks are also down sharply with Unicredit down by 6.4% and Intesa lower by 8%. Spanish banks also lower with STD and BBVA in particular lower by 4%.

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