It happens every year in the NFL.  A season that begins with a great deal of promise suddenly turns into one filled with despair when a team loses four of its first five games.  Without fail, the starting quarterback gets pilloried and fans clamor for him to be replaced by the backup quarterback.

The backup quarterback comes in and wins his first game as the team rallies around him, but before long the reasons why he was holding a clipboard the first five weeks are exposed.  Soon, it becomes apparent that he is not the answer either, not because he can't throw the ball, but because the real issue is that his offensive line isn't any good.

Some elite quarterbacks can make up for a bad offensive line, but there aren't many elite quarterbacks.  If the offensive line isn't structurally sound, chances are most quarterbacks aren't going to be successful and the team will lose a lot more games than it wins.

Alas, the backup quarterbacks have been put in the game in Greece and Italy.  George Papandreou and Silvio Berlusconi are out while Lucas Papademos and Mario Monti are in.

Various political contingents are rallying around the two and a great deal of hope is resting on them to reverse the socioeconomic tide in their respective countries.  That was evident last week as the capital markets fought their way through rising bond yields in the eurozone and closed the week on an upbeat note.

In particular, the U.S. equity market advanced 0.9% last week in spite of a 3.7% decline on Wednesday that was the size of an offensive tackle in the NFL.

It is a new week now and the pass rush is on again in the form of Italian bond yields, which are rising after Italy carried out a costly 5-year note auction.  Specifically, 3 bln euro of 5-year notes were sold at an auction rate of 6.29%, which was well above the 5.32% rate seen at the prior auction.

In response, the yield on the closely-watched, Italian 10-year note moved back above 6.50% (now 6.58%) and many other sovereign bonds, namely Spain (5.97%), followed suit.

The jump in eurozone bond yields overshadowed an otherwise good showing from Asian markets on Monday, which ended mostly higher after Japan reported an annualized 6.0% increase in Q3 GDP.

European bourses are backpedalling, with most down at least 1.0%.  The U.S. equity market for its part is also expected to be back on its heels at the open, yet it won't be run over by the bears (like the Detroit Lions were yesterday). 

Currently, the S&P futures are 0.3% below fair value, so it is looking more like the bulls are going to have to roll out if they want to complete a successful pass play today.

One interesting crossing pattern this morning is that the Treasury market is on the defensive (10-yr down 8 ticks) despite the reported concerns about Europe.  That may be a delayed response to Friday's equity rally, when the bond market was closed for Veterans Day, but it also may be a tacit sign that the Treasury market is respecting the possibility that the backup quarterbacks in Greece and Italy might just have some game in them.

We shall see soon enough.  There are a lot of structural issues in Greece and Italy and time is going to tell before long if Papademos and Monti have elite quarterback capabilities.

--Patrick J. O'Hare, Briefing.com

Patrick J. O'Hare is Chief Market Analyst for Briefing Research, Briefing.com's institutional research service.  To request a free trial, please email researchsales@briefing.com.