As US markets were closed for Monday's Memorial Day Holiday, there was little fanfare out of European markets, even if there is a growing sense that Spanish banking problems are less and less of a a supplement to Greek elections and more of a critical item in and of themselves.  Here we've been almost pacified by the notion that there's a long wait until June 25th for the next critical event for European economics when new Greek elections take place, but increasingly, it looks like developments in Spain might move from the "on deck circle" and step right up to the plate, especially if Monday's Euro-era record-setting spread between Spanish and German debt is any indication.

(Reuters) - The risk premium on Spanish government debt hit a euro-era high on Monday, and looked set to keep rising as investors factored in the growing cost of shoring up the country's banking sector.

Government sources told Reuters Spain may bolster Bankia with sovereign bonds in return for shares in the bank and could use this method to prop up other troubled lenders. Such liabilities pump up the state's borrowing costs which are already near levels deemed as unsustainable.

Although Prime Minister Mariano Rajoy ruled out seeking outside help to fix banking problems, analysts say Spain is nearing that moment. They expect Spanish yields to rise regardless of whether underlying fears that Greece may soon leave the euro subside or not.  (read more...)

It's not that Spain isn't or hasn't been on the market's collective radar, but the timing of last week's Catlonian cries for help and Monday's comments from the Spanish PM essentially confirming that Catalonia does indeed have a liquidity problem even if they're not "broke," is akin to Spain "not so fast everyone..." to those primarily focused on Greek elections at the end of the month. 

We're a bit interested in domestic economic data this month and even this week as well.  Reason being: we'll get another FOMC announcement closer to the end of the month and another Bernanke Press Conference.  While that even itself is probably the most meaningful domestic offering in terms of calendar data, the economic reports that precede it stand some sort of chance to help shape it.

To that end, the "biggie" this week is Friday's NFP.  It's flanked by Incomes/Outlays and ISM Manufacturing--no slouches in their own right--and follows "month end" on Thursday.  Considering that ADP Employment is also moved up to Join GDP, Jobless Claims, and Chicago PMI on Thursday, that really leaves the last two days of the week as the most significant by far.

But Today and tomorrow are not your characteristic "hopelessly slow" trading days.  Case Shiller Home Prices and Chicago Midwest Manufacturing provide at least some 3rd tier data in the morning, followed by Consumer Confidence at 10am.  The morning data is weaker on Wednesday, with only Pending Home Sales at 10am, but the month-end extension buying and position jockeying could be getting underway by then, not to mention the plethora of Fed-Speakers in the afternoon.  Underlying the whole lot of it, is the requirement to stay tuned in to European headlines.  Not your typically slow summer so far...