There were heavy volumes in corporate credit with the notable absence of real-money players who have mostly been sitting on the sidelines.

Similar to yesterday's action, much of the flows were driven by dealers and fast-money players who are watching oil prices with concern.

In an interesting geographic breakdown, U.S. hedge funds are leaning more short compared to European accounts which are still buying.

Oil broached $100 a barrel at one point and inflation pressures remain ever-present (European policy-makers are already considering rate hikes causing the Euro to rally today).

Stocks closed in the red with the DOW stock index -0.9% lower; corporate credit spreads closed near the wide prints.

Have we reached an inflection point in the markets where the technical liquidity pressure is giving way to fundamental factors and geopolitical risk?

We may have, but the jury remains out until real-money steps into the fray; with treasury bonds rallying this week, corporate cash bonds appear rich on a dollar price basis.

In the meanwhile, animal spirits will continue to run amok and longs may capitulate further.

In Libya, every day that the unpredictable Colonel Qaddafi remains in the picture is another risky day for the markets.

A man who has contravened all international laws and declared war on his own people will have no compunctions about torching his oil fields in a classic scorched earth policy; this will crush the markets.

The situation in Bahrain, home to the U.S. fifth fleet, also concerns the markets; the story is a little more nuanced, however, and is essentially a tug-of-war between Iran's extensive intelligence apparatus and other players.

New issue volumes will pick up next week.

Today, pipeline company Kinder Morgan sold $500 million of 5 year debt at +135 and $600 million of 30 year debt at +180.

Medical giant McKesson sold $1.7 billion of debt in a three-part offering: $600 million 10 year at +130, $600 million 5 year at +115, and $500 million 30 year at +150.

Initial jobless claims and durable goods order numbers are out tomorrow.