U.S. Treasury debt prices jumped on Friday as fears over a full-fledged bailout for Spain drove a safety bid for government bonds, nudging their yields near historic lows. Spain's heavily indebted eastern region of Valencia on Friday said it would apply to Madrid for aid, complicating central government efforts to avoid a massive rescue deal. The country also cut its economic outlook on Friday, indicating the government expects the economy to remain in recession through 2013 and rating agency Egan-Jones cut Spain's credit rating further into junk status, citing the weakening economy including crumbling finances among the country's regions.
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