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US Tys are trading sharply..........>

US TSYS SUMMARY
US TSYS SUMMARY: US Tys are trading sharply higher, but well off intra-day
highs, following flight-to-quality buying in wake of increased political
instability in Italy. Yield curve has pivoted around the 7-yr part of the yield
curve.
- US 10-yr Tsy yield hit low of 2.797% shortly after 0830GMT (0430ET) at the
height of the volatility seen in European bonds but is now down 7.5bp at 2.8568%
as markets stabilize after a blowout morning session for Italian BTPs.
- Earlier Fed non-voter Bullard reiterated his dovish stance overnight urging
caution in near-term interest rate hikes, noting low inflation expectations &
what he sees as a neutral policy rate.
- Eurodollar strip has bull flattened as green and blue contracts are 6.5 to 7
ticks higher, but these are also well off session highs with EDH1 last at 97.08
vs intraday high of 97.15.
- Swap spreads are a touch wider, while breakevens are marginally tighter.
- Little data from the US today so attention likely to remain on Italy and
geo-political newswire headlines. 

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