Italy's president rejected euroskeptic economist and former banker Paolo Savona for finance minister.

He must now form a new government or call for another election.

US yields are sharply lower as money pours into safety.

US Treasury yields are sharply lower Tuesday morning as traders have awakened to growing political turmoil in Italy after President Sergio Mattarella rejected euroskeptic economist and former banker Paolo Savona for finance minister. Now Mattarella must form a new government or call for another election.

And while yield in Europe are surging, heavy buying pushed the US 10-year yield down as much as 13 basis points to 2.79%, its lowest level in 7 weeks. Here's a look at the scoreboard as of 7:04 a.m. ET:

2-year -6 bps @ 2.42%

-6 bps @ 2.42% 3-year -8 bps @ 2.53%

-8 bps @ 2.53% 5-year -9.4 bps @ 2.67%

-9.4 bps @ 2.67% 7-year -9.9 bps @ 2.79%

-9.9 bps @ 2.79% 10-year -8.7 bps @ 2.84%

-8.7 bps @ 2.84% 30-year -6.8 bps @ 3.02%

Buying has flattened the yield curve, with the 2-10-year spread tighter by 3 bps at 42.7 bps. It is currently on track for its flattest close since 2007.

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