Bonds down but steady as the August 2 deadline approaches

The bond market remains steady, though down abit today, despite continued uncertainty regarding the U.S. debt ceiling and a possible credit downgrade.

"Market focus will remain on the U.S. until this crisis is resolved," said economists at BMO Capital Markets. "However, markets haven't forgotten about Europe's problems, as Spanish and Italian yields are up sharply across the curve. Spain 10-yrs are back above 6%, from a post-bailout low of 5.72%, while Italy 10-yrs are up to 5.76% from a post-bailout low of 5.34%."

New economic data from Europe was mixed: Euro area Q1 GDP was confirmed at 0.8% quarter over quarter, but Germany's industrial production gauge missed expectations by dropping 0.6% in April following a 1.2% climb a month before. Moreover, German exports declined 5.5% in April, a substantial drop following a 7.2% increase in March.

Meantime, earnings season continues today with releases from Dow Chemical, Visa and Boeing. BMO called the reporting season a healthy one so far, as "80% of S&P 500 companies have beaten earnings expectations."