As recently as last week this author wrote about potential big trouble in China (a long-held view).

Yesterday morning the markets opened on a much, much weaker tone on the back of China (and Europe) worries.

Commodities were weaker across the board on anticipation of lower industrial demand from China going into the future.

As for the European sovereign story, as long as uncertainty remains about a resolution, European peripherals will continue to trade weak.

Sovereign credit spreads for Spain, Portugal, and Ireland are closing 20-30 basis points wider while spreads for Greece are closing 70 bps wider.

In a bid to stay solvent, Greece announced plans to sell off government stakes in telecom OTE and Hellenic Postbank.

In Spain, the incumbent Socialist party was routed at the elections by an angry public.

The bottom line is whether or not banks that have substantial exposure to the European peripheral region will be forced to take hair-cuts on their debt holdings or not.

Aside from succession talks, the DSK happenings may not help Europe's case.

There will be a tremendous amount of political pressure brought to bear by U.S. politicians (responding to an angry public) to ensure that the IMF (International Monetary Fund) does not go on a spending spree with U.S. taxpayers' money.

The Euro took a tumble (long anticipated by Market Color) to close at 1.4 against the U.S. dollar; the Euro has a lot more room to lose value before the year is over.

In corporate bond new issues, the market was braced for yet another big issue day until it became apparent that today's sell-off was spooking a lot of investors.

One of the only issuers for the day was Norwegian Sparebank Boligkreditt which sold $1.25 billion of 5 year covered bonds at +85.75 (mid-swaps +62); these levels look very cheap (and were cheapened due to the market sell-off).

Norwegian covered bonds are considered very safe corporate paper which might explain why this was one of the few planned deals to print; the deal was bid mainly by real-money investors.

In the high-yield space, Regency Energy sold $500 million of 10 year bonds at +338.

New home sales numbers are out today; here's hoping to a better open in the morning.