Concerns about Allied Irish Bank, and non-stressed, Euro zone stress tests has put European debt risk on the front burner. Euro zone financing fears has widened out spreads between European sovereigns. Overseas sell off in equities overnight had led to pressure on the US Stock indexes.
US Treasury bonds face a calendar of 3’s, 10, and 30’s in a holiday shortened week. Fixed income investors will greet slightly higher yields monthly. Economic calendar is light and focus will be on D.C.
Congress comes back into session next week and political rhetoric will be heightened going into the November mid-term elections.
Center graph shows the movement in the USD vs. the Euro over the past three months.