A Euro zone deal to support Greece gave a lift to the U.S. equity markets this morning. How the deal will actually be implemented is still in the discussion phase, but early on this news had the U.S. bond market lower.
The market will focus on inflation this week, as well as earnings reports from Alcoa, Bank of America, and JP Morgan Chase. The Fed has continuously stated inflation is not a concern in the near term, and the Fed has been reducing its market support mechanisms.
Regarding the bank stocks, the market will focus on the balance sheets---mainly on reserves taken for loan losses. If provisions for loan loss reserves fall significantly this will be a positive sign that losses have peaked and are now trending lower.
Since the lower open, bond prices have turned higher, with the yield on the 10 year note dropping to 3.85% after touching 3.92% early this morning.
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