Players will be watching oil prices very closely

The weakness from the Asian session continued into the European morning session and on into the U.S. session.
It was not a good day for new bond issues as risk-off sentiment kicked into the markets in a broad-based sell-off.
Stocks were almost 2% lower while gold closed 2% lower to end near $1,670 an ounce.
In a true flight to quality, Treasury bond prices surged higher and the U.S. dollar gained against the Euro to close at 1.31.
In credit, spreads for financial benchmark bonds (Goldman Sachs 2022's, Bank of America 2022's, Morgan Stanley 2021's etc.) widened some 25-30 basis points (bps).
Spreads for low-beta corporate bonds closed roughly 5 bps wider.
There was little client buying of bonds at the wider levels but still there was no panic selling either.
Investors will watch over the coming days to see whether today's sell-off was a temporary correction or a trend reversal.
The negative sentiment reflects increasing concerns about the fallout of Greece's PSI (private sector involvement) deal for bond-holders.
There was a Reuters story on a report by the IIF (the Institute of International Finance; the bank group that negotiated the Greek PSI deal on behalf of private sector investors).
The IIF report outlined the consequences of a disorderly default for Greece estimating that contingent liabilities for the Eurozone would likely exceed €1 trillion.
The IIF report also suggested that a disorderly default would lead to sizable bank recapitalization costs (approximately €160 billion).
Stating the obvious, the IIF report finally said that Portugal, Ireland, Spain and Italy would also likely need external support in the event of a disorderly Greek default.
Whether or not Greece defaults in an orderly or a disorderly fashion is actually a moot point.
Economic figures coming out of Europe already point to a Eurozone recession that is only likely to deepen.
Iran lurks beneath the surface as another source of worry for market players.
President Obama has had a very busy schedule over the past few days with several special security meetings being held in Washington.
The irony is that American foreign policy over the past decade has strengthened Iran's hand in the Middle East.
The toppling of Saddam's regime in Iraq and the Taliban in Afghanistan (both of which were antagonistic to the Iranian mullahs) eliminated Iran's two most natural geographic checks.
In the process, Iran's sphere of influence has expanded, stretching all the way from Afghanistan in the East to the Mediterranean (via Iraq, Syria, and Lebanon) in the West.
With or without nuclear weapons, Iran has become the de facto regional hegemon.
The brutal crackdown by Assad's regime in Syria could not have happened otherwise.
Players will be watching oil prices very closely.
Players will also be watching Friday's U.S. payroll numbers with market bulls likely to cling on to anything positive.