Wild swings continue to be the norm in the market as the European debt crisis remains central to how investors trade.

The 10-year Treasury yield oscillated between 1.88% to 2.02% over the last two trading days. This morning it's holding steady at 1.95%, while the two-year and 30-year yields are each one basis point firmer 0.20% at 3.25%, respectively.

S&P 500 futures are 12.6 points lower (-1.09%) at 1,144.79 and Dow futures are 94 points lower (-0.86%) at 10,895. Both indexes spent most of Monday in the red - often down more than 2% - before a last-hour recovery.

Rumors and hopes that China may be gearing up to buy Italian debt played a major role in Monday's volatility. 

"The possibility of Chinese investment comes at a critical moment for Italy, as markets demand increasingly high yields to buy Italian public sector debt," reported the Financial Times, which noted Italy's debt is projected to reach 120% of GDP this year - "a ratio second only to Greece in the eurozone."

Light crude oil rose 0.79% overnight to $88.86 per barrel, while gold prices rose 0.04% to $1,814.

Key Events:

2:00 - The monthly spending imbalance in the Treasury's Budget Statement for August is expected to be $130 billion. Forecasts of the monthly deficit range from $75 billion to $132 billion, versus gaps of $90.5 billion in August 2010 and $103.6 billion in August 2009.

"We estimate that Treasury receipts grew by 6% year-over-year in August, but were dwarfed by a surge in government outlays of 21.0%," said Nomura Global Economics. "As such, the US budget deficit likely widened to $133 billion compared to $90.5 billion in August 2010. The US budget deficit is tracking -$1,400 billion in fiscal 2011 compared to -$1,294 in fiscal 2010."

• Treasury Auctions:
• 11:30 - 4-Week Bills
• 1:00 - 10-Year Notes