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Europe Optimism Cheers Credit Markets: Art Cashin

"So far everyone wants to stay with the optimistic side, and the good news is the credit markets are buying into this a little bit," the head of UBS Financial's floor operations told CNBC, referring to this Wednesday's meeting of EU leaders.

The fact that yields are "down on Italian paper means they think something will get done," he added.

Art Cashin's Market Outlook

But there are still 17 nations involved in the European Union and it's "hard not to see…it will be tough [for some nations] to give up some sovereignty," he warned.

"Do the Greeks want to be dictated to? Is there an easier way out? If this goes to referenda it's not going to work. They all relish their particular culture and habits but something has to be done."

The U.S. also has a big interest in Wednesday's meeting, Cashin said.

"With news in America getting better, the president’s got to be feeling pressure that if something goes wrong in Europe, that can be the election," Cashin said.

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Disclosure information was not available for Art Cashin or his company.