Rally in Treasuries

When it gets too much
I need to feel your touch
--Bryan Adams

Treasuries staged a huge rally on Tuesday that knocked 10 yr yields down a couple of boxes. Although some of those gains were given back yesterday, prices are advancing again this am.

The proximate cause of the rally was renewed trouble in Europe, particularly in Italy, that motivated an old fashioned 'flight to quality' trade.

It is also likely that shorts who piled into bearish bond bets near the lows were caught off-sides.

And then carried off the field on stretchers...

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