There is no US economic news being released today but the markets are waiting on pins & needles for the results of the European banks “stress test” which is scheduled to be released today.  European leaders are hoping that the tests show that European banks are stronger than the markets are currently giving them credit for.

If you’ll recall European sovereign debt worries have been the primary driver of the “flight-to-quality” trade which has pushed yields lower here in the US.  If this report does reveal that the European financial system is better off than the markets currently understand it to be then this would likely cause stocks to rally which would put upward pressure on rates.

This is the primary focus for the markets today.  This is also very difficult to forecast so I’ll remain in a neutral position.

Current outlook: neutral