Yesterday was one of those busy days. The news came in from every front. In the world of banking, just for once, good news was the order of the day, but in the UK and Europe it was another day of worry.

Good news hit the price of oil too, as it emerged inventory levels in the US were much higher than expected, suggesting US demand for oil is falling fast. And from beyond the Great Wall, a truly promising set of data was revealed.

Yet disaster also came and dealt a blow yesterday too, both in the US with news on inflation which was just awful, and in the UK with the latest alarming job data.

In this day of pluses and minuses, the bulls won; at least they did in the US, and then in the Far East with markets seeing big daily rises.

Is this the sign that bottom has been reached? Or merely one of those freakish days you get from time to time?

For banks the news seemed bad, but markets loved it.

Wells Fargo, the giant US commercial bank, announced a 22 per cent drop in earnings. Oh dear, you are probably saying, so that’s more bad news. Well no, the markets didn’t see it like that. So down in the dumps have analysts been lately, that they saw a mere 22 per cent drop in earnings as being positively wonderful news. Shares surged 32.8 per cent as a result. Markets knew things were bad, but for one glorious afternoon, it seemed as if they weren’t just as bad as they had thought.

The Fed helped too. You will recall, on Tuesday Ben Bernanke appeared before the Senate Banking Committee, and really said very little that wasn’t obvious. But yesterday, it was the House Financial Services Committee which heard the benefit of Ben’s wisdom, and this time a little snippet was slipped in, which got the markets in a tizzy. He was talking about Fannie Mae and Freddie Mac, the two mortgage giants which underpin the US mortgage markets, and Ben said that the twosome are in “no danger of failing.”

That was it. Four words. Four words we knew really, because it was inconceivable the Fed would allow their failure. But it was nice to hear those words from Ben’s lips.

By the way, Bernanke also said they were having difficulty raising more capital. But then again he said they were adequately financed.

But in the UK, yesterday it was HBOS turn to feel the heat. With the closing deadline for the bank’s rights issue looming, it is just looking less and less likely to come off, and it seems that this time the underwriters will have to start earning their fees, and cough up maybe all of the money.

And what a lot of money it is too. In all, the bank is raising £4 billion and if the underwriters do end up footing the bill, it will be the largest rights issue to fail since 1987, or so said the FT this morning.

Mind you, HBOS is not alone. Barclays Bank has its troubles too, and many are doubtful that its£4.5bn capital raising will go quite the way planned. Shareholders are unlikely to stump up all the money, and it is thought Qatar Investment Authority may end up pumping in all the money, single-handed and find itself with a 10 per cent chunk in the bank too.

But here is the oddity.

There seems to be a feeling that in Europe the banking turmoil may be nearing the end. In the US, where markets were so buoyant yesterday, more bad news could be winging its way to us all.

Writing in the Independent, Hamish MacRae pointed out that the prospective dividend yields on FTSE 100 companies is now higher than on ten-year gilts. He says this has not happened since the 1950s.

In fact, says Mr MacRae, the average dividend yield on FTSE 100 companies is 5 per cent. There is a snag though with this bullish thought. If company write downs continue to mount, and the fund-raising game continues, one assumes dividends will be cut and cut by quite a bit too.

In a way, there are parallels here with the buy-to-let property market. One view is that rental yields will act as a kind of bottom for the market. But as one reader pointed out on our blog, you can’t squeeze blood out of a stone. People can’t pay rent they can’t afford. And neither can corporate Britain continue to pay dividends at the levels we have become used to.

In the US, by contrast, there is a feeling that the banking crisis has further to go. Yesterday saw sharp falls in the dollar, and there were growing fears that foreign investors may be about to give up the ghost on the US.

Today, all eyes turn to Merrill Lynch. It’s her turn to reveal quarterly profits  or is that quarterly losses. The last three quarters all saw losses, most expect the latest to be like that too. Really, Wall Street’s mood will depend on the extent of the losses. So this time tomorrow we will know.

But, while the mood on Wall Street was one of excitement and promise yesterday, the economic data told a quite different story. In fact, the news on inflation and the rate of interest was downright awful; to find out why, read the next article