After last week offered up few reasons to stray from the recent course for bond markets, the outlook of data and events in the week ahead is only marginally better.  The pace of data is generally better this week, and certainly more evenly distributed.  Whereas last week offered FOMC minutes to help us continually seek new insights to the Fed's potential QE3 plans, this week offers Bernanke himself, delivering a semi-annual report to Congress.  That doesn't necessarily mean we think Bernanke will offer up something incrementally better than the FOMC Minutes, but the testimony simply presents another opportunity for market participants to flesh out the QE3 puzzle.

But as Fed's Bullard noted last week, "even more pressing is the situation in Europe. The crisis is contributing to recession, adding a dragging factor on U.S. and Asian performance. There is a financial sector dimension which periodically threatens to expand into a more generalized financial crisis." 

More on some of this week's European considerations from Reuters:

After Italy successfully navigated a bond auction on Friday despite a two-notch credit rating downgrade from Moody's Investors Service, the next such financial test of the euro zone comes on Thursday when Spain is due to tap the bond market.

Thanks to an agreement in principle to bail out Spanish banks to the tune of up to 100 billion euros ($122 billion)without adding to the state's debt, yields on 10-year Spanish bonds have fallen back from the 7 percent level widely deemed to be unsustainable.

Euro zone finance ministers will gather on Friday to put flesh on the bones of the Spanish deal, clinched in return for a further 65 billion euros in tax increases and spending cuts announced by Madrid last week.

Filling the role of the good old-fashioned economic data is a mixed offering of housing data along with Retail Sales and Manufacturing data.  Monday is a fairly strong starter as far as Monday's go.  Retail Sales and The Empire State Manufacturing Survey lead off in the 8:30am time slot and the relatively less important Business Inventories at 10:00.

Bernanke Testimony starts on Tuesday at 10am, and is preceded by Industrial Production at 9:15am.  Consumer Prices and Treasury International Capital are also out on Tuesday morning, but are not on our radar as significant market movers.  The NAHB's Housing Market Index prints at 10am and is seen coming in at 29 again, it's highest recent mark.  

Wednesday's only major data is Housing Starts at 8:30am.  Bernanke continues the Congressional testimony at 10am.  Thursday sees the third housing-related report of the week in the form of Existing Home Sales.  Additional Thursday reports include weekly Jobless Claims and The Philly Fed Index.  Friday is empty, though European headlines should be trickling in throughout the morning.