It was a bizarre day in the markets with stocks closing flat as Fed Chairman Bernanke spoke raising questions in the market about a potential new QE (quantitative easing) program.

Corporate credit traded heavy in the morning with spreads weaker even as stocks traded in positive territory.

By the afternoon, stocks had erased their gains but credit felt somewhat better.

The investment grade CDS (credit default swap) index saw interesting price action as dealers that are long corporate bonds seemed to use the index to hedge their credit risk.

Taking a step back and looking at the political picture, Bernanke will face resistance pushing through a new QE through Congress.

Any new aid will probably be structured in a way so as to avoid the need for Congressional approval; as Market Color noted before, a de facto QE (without fanfare) using principal to reinvest in securities is likely.

Dallas Fed Chief Richard Fisher spoke today about the need for a more sensible approach to fixing the economy; printing more money has clearly not worked.

This player attended the Morgan Stanley Municipal conference, taking note of the candor on display during the legislative panel with Senator Roger Wicker, Congressman Steve Stivers, and Congressman Quico Canseco.

There was broad consensus that simply pouring more money into the financial markets did little to solve the unemployment picture.

Over lunch, former Congressman Harold Ford Jr. spoke eloquently about the need for a non-partisan approach to dealing with issues around the debt ceiling.

Players should take note of the former Congressman; he is future Presidential material.

In corporate bond new issues, the pipeline was light, typical of the slowing summer pace.

MetLife issued $350 million of 7 year bonds at +137.5 and $800 million of extendible floaters; the 7yr was bid predominantly by insurance and real-money investors.

In secondary flows, investors sold the off-the-run 2015 and 2016 MET bonds to make room for the new issues.

In the sovereign space, the Republic of Poland sold $2 billion of 10 year bonds at +170.

Kia Motors of Korea sold $500 million of 5 year bonds at +208.

Stocks could rally tomorrow on the back of Bernanke's latest comments.