Are we out of the woods just yet?

The Fed's beige book pointed out the modest gains in the U.S. economy despite higher fuel costs.
With gasoline prices likely on a downward trend (due to supply-and-demand factors) it bodes well for the economy.
While the fear in the market was palpable on Tuesday, Wednesday's trading was off to a better start.
Spreads for benchmark bank / financial cash bonds (i.e. the 10 year Goldman Sachs or Morgan Stanley bonds) were 5-10 bps tighter.
The tone is still cautious, however, after Tuesday's sell-off.
Notably, there were a couple of real money investors selling bonds on Tuesday, for the first time in a while.
That being said, some investors are thinking of using the recent widening in spreads to add risk.
There was a chunky ($20-25 million per name) financial bond OWIC (offers wanted in competition) list in the market.
Are we out of the woods just yet?
Italy's auction of up to €5 billion BTP (Buono del Tesoro Poliennale) government bonds on Thursday may stress the market again.
But the reality is that policy-makers in Europe are better prepared this time around compared to last year.
The European LTRO (longer-term refinancing operations) program resolved Europe's immediate liquidity issues.
Ultimately, Europe will have to move toward a continent-wide Euro-bond program to avoid challenges such as those posed by Italy and Spain.
There are a couple of interesting conferences this week; one on covered bonds and another Minsky spectacular (deficits and debt) at the Ford Foundation.
Initial jobless claims numbers are out on Thursday.