For every action there is an equal and opposite reaction, or something close to that, as Newton once said. The action is that no one really wants to buy Spanish Bonds for 350 basis points above Treasuries. Banks (without the ECB), hedge funds or MF Global (they all ready did that) are not ready to take the leap on more overleveraged countries again. The reaction is that they are buying Treasuries.
Take a look below at the levels we had just only a week and a half ago. And a month ago, the whole world was worried about runaway inflation. Not so much today (and last week), as the TLT made new recent highs.