Sovereigns continued to outperform, with the Markit iTraxx SovX Western Europe tightening by 16bp to 150bp. The difference between the SovX and the Markit iTraxx Europe is now at its smallest since mid-May. Dealers reported strong demand to sell protection, and both peripherals and core European names rallied. Successful bond auctions by Portugal and Germany helped sentiment. The former country in particular must have been pleased to issue the 10-year debt, though it was forced to pay a high yield to do so. Portugal also sold three-year debt, and again this was over subscribed. France, one of the weakest performers of late, saw its spreads tighten 7bp to 92bp in a broad-based rally. Sovereigns across the credit spectrum, from Norway to Greece, tightened today. Financials bounced back after yesterdayâs poor showing. The Markit iTraxx Senior Financials index was 12bp tighter at 192.5bp, with continental banks providing the impetus. French banks, which have been under severe pressure recently, were among the strongest performers today. However, the index and its constituents are still trading close to their record wide levels, reflecting the concerns over the sector. http://ftalphaville.ft.com/blog/2010/06/09/256331/cds-report-battering-for-bp/