Stocks and bonds gyrated this week on growing and then waning concerns over the viability of the European Common Union. Investors had not taken kindly to the details of the Irish bailout plan announced last week. Of primary concern was the belief that the plan would do little to stop deteriorating conditions in other periphery nations.

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Stocks and bonds gyrated this week on growing and then waning concerns over the viability of the European Common Union. Investors had not taken kindly to the details of the Irish bailout plan announced last week. Of primary concern was the belief that the plan would do little to stop deteriorating conditions in other periphery nations. CDS on Portuguese and Spanish debt hit record levels earlier this week before the market started getting more constructive on the ability of the EU and ECB to contain the contagion. This along with strong economic numbers led to a powerful rally mid week. Today was possibly worrisome with a very weak employment report, which caused an early session flight to quality. Risk tolerance returned, however, and stocks and bonds are generally flat-to-stronger for the day. The complicated dance that is Washington continues to play on with a number of tax issues set to expire in the next few weeks. It is our feeling that the market is assuming that these issues will generally be resolved positively. Next week is a light economic week, although some large Treasury auctions loom.

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