It was a head-spinning boomerang of a trading day with treasury bonds and corporate credit spreads closing unchanged despite a crazy intra-day flight from risk.

The morning started with a massive flight-to-quality bid for Treasury bonds as stocks opened deep in the red and ugly news filtered out of Japan's nuclear reactors; corporate credit spreads were 5-10 bps wider.

By the end of the day, stocks closed off of their lows and high-grade cash bond spreads were unchanged (although high-yield credit under-performed).

The world has not changed markedly since yesterday and the Fed's generic statement and interest rate decision did not surprise anyone.

So why was there an end of day rally off the lows?

There is so much excess liquidity sloshing around the financial system that regardless of how bad the fundamental news seems to get, the market seems to find a way to justify a rally after each subsequent sell-off.

First the market was fixated on Europe. Then the focus shifted to unemployment in the U.S. Happenings in the Middle East provided temporary distraction. Then Japan's devastating earthquake helped distract from the Middle East.

The fact remains that the European sovereign situation is far from over, unemployment remains a problem, the Middle East will likely get more volatile, and Japan's reconstruction will take years (not to mention Japan's pre-existing demographic problems).

What is certain is that volatility is back.