While global markets seem much more concerned about macro issues right now, US centric observers will no doubt be watching housing data as we go into the height of the season and the debate over whether the US housing market has turned the corner continues to rage.

The relief rally continues into the Memorial Day Holiday – but there remains a 3-card monte game for risk and the confidence game played by Europe looks set to unravel next week. Banks remain a critical risk factor with bank runs the worst case scenario – just watch Bankia. Consumers in France and Germany may be the explanation for why its not worse and why this card trick works today. But voters have a tendency of surprising – particularly when they feel ripped off.

The dichotomy of the moment hit hard at the Track London Idea Lunch, which brought together a handful of asset managers, hedge funds and bankers to discuss the issues of the financial markets. From the onset, the EU established its position as the main topic upon which almost everything else revolved. China, India, US and politics rounded out the thematic discussion. The list of trades outstripped the fears but the depth of doubt about Europe was profound. The irony of the incredible weather - the best day of the year so far for London - against the dark mood for Europe seemed to add to the two fears for trading - one being that risk would rally back sharply should a short-term solution for confidence be found and the other being that no matter the plan all efforts to fix the ongoing debt crisis will fail.

The US yield curve is one of several key market factors that we are monitoring very closely right now, to determine if the current April decline in the US stock market is just a correction within the larger October 2011 advance or the beginning of a more sustainable decline. The US 2-year/10-year yield curve has continued to flatten, by an additional 31 bps to 139 bps through the end of last week. Meanwhile the S&P 500 — which represents an indirect bet by investors on the direction of the US economy — has coincidentally declined as expected, by an additional 80 points or 6% into Friday’s 1292 intraday low.