According to the market report by Bloomberg, The 10-year Treasuries shot up along with the European Bonds due to deepening political crises in Italy, precipitating global risk-off trading. When the two groups attempted to form a left-right coalition government, Italian President Sergio Mattarella nixed their choice for economy minister - a distinguished, 81-year-old economist named Paolo Savona - because he (Savona) has been critical of the euro currency and has urged Italian policymakers to develop a euro exit plan just in case some future crisis demanded it.
"No central bank would act on the back of the events of a few days", one source said.
Two populist parties failed to form a government on Sunday after Italy's president refused to accept their euroskeptic nominee for the post of finance minister. Britain's FTSE 100 climbed 0.7 percent to 7,729 and Italy's FTSE MIB jumped 2.6 percent to 22,340.
Even the idea of Italy leaving the euro was enough to send the country's bond yields to multi-year highs on Tuesday.
"It's also important to remember that the markets are not in anything like the kind of conditions they were when the eurozone crisis was at its most intense back in 2011 and 2012", he noted.
Earlier Tuesday, Asian stock markets closed mostly lower, with traders keeping an eye on oil prices, which have tanked since Saudi Arabia and Russian Federation indicated they could raise output after abiding by a self-imposed cap for two years.
Italy's bond markets saw their worst sell-off in 26 years and the euro hit a 10-month low against the United States dollar on Tuesday but by Wednesday things looked to be improving slowly.
ITALY: Investors dumped Italian government bonds, driving borrowing costs sharply higher for that country and rekindling fears of more financial strain for Europe's third-largest economy.
The chaotic developments in Italy have spooked investors, leading to the euro's losses today.
Pensioner Alberto Mazzelli told Al Jazeera that ditching the lira bought nothing but problems for Italians.
A Reuters poll conducted before the release of the regional data suggested that Germany's harmonised consumer price inflation (HICP) rate would rise to 1.8 percent in May. Month-end dollar selling by Japanese exporters is also seen as behind the dollar's fall, market players said.
ASIAN SCORECARD: Japan's Nikkei 225 index fell 0.1 percent to 22,171.35 and the Shanghai Composite index tumbled 0.7 percent to 3,075.14. Sydney gave up 0.5 percent, Singapore dived 1.7 percent and Seoul was 1.6 percent lower.
ENERGY: Benchmark U.S. crude fell 1.1 percent to $67.13 a barrel in NY.
Energy had the highest rate of inflation at six per cent, reflecting increased oil and gas prices, followed by food, alcohol and tobacco on 2.6 per cent, services on 1.6 per cent and industrial goods on 0.2 per cent.