The market is still cautious with the political instability in the euro area and rising risk of contagion. The debt crisis is not over and the market is focused on the big names Italy and Spain for the fear of tarnish from the 2-year old crisis.

Markets today are focused on Spain that is preparing to sell as much as 4.0 billion euros of 12-month and 18-month bills. The auction comes amid heavy market tension that pressured the 10-year yield yesterday above 6.0% for the first time since early August.

Greece also is preparing to sell 1.0 billion euros of 13-week bills which will be under heavy scrutiny amid current conditions.

The Spanish and Greek auctions today come after Itlay's sale on Monday that was met with strong demand despite the rising political and outlook instability yet it was sold at the highest cost since 1997.