Treasury bonds continued to rally even as stocks closed in positive territory, albeit off the highs of the day.

Late in the day, well after the market closed and true to recent tradition, rating agency Moody's dropped another bomb on the market.

Moody's announced that the sovereign rating for U.S. debt may be cut.

Stock futures (since the stock market had closed by then) reacted by dropping into negative territory but CDS (credit default swap) index spreads are closing unchanged to yesterday's close.

At this point it has become fairly obvious that the rating agencies are, well, behind the curve to put it lightly.

The rating agencies simply react to events and state the obvious in a bid to save face.

There is absolutely no possibility that the U.S. will default on its debt in the foreseeable future.

Any player betting on this possibility will not last long in the markets; they will get crushed by their negative mark-to-market long before their trade ever pays off.

Savvier players will ignore Moody's on this count.

That being said, however, the broader problems dogging the global economy are undeniable.

The debt issues facing the European periphery (and eventually China) are far more serious and pressing than the political football that the U.S. debt ceiling has become.

There is a lot of noise around European bank stress test results coming out on Friday.

It is almost a certainty that the results will be massaged to "show" the majority of European banks to be in sound condition.

Whether or not the market believes these results is a different matter.

Pre-Moody's, the highlight of the day was Federal Reserve Chairman Bernanke's testimony to Congress.

There was an amusing semantic exchange on whether or not Gold is money.

Yes Virginia, this player thinks that Gold is money.

As if on cue, Gold is closing at $1,585 at the all-time high (in nominal terms).

Bernanke tried to defend his record and legacy of inflationary monetary policy (Quantitative Easing).

Bernanke went so far as to reiterate his long-standing position that the door be left open for another bout of Quantitative Easing.

Quantitative Easing has succeeded in propping up the financial markets (stocks, bonds etc.) but has done nothing for the real economy.

In fact, the real economy has suffered with unemployment becoming a chronic problem and inflationary pressures building up.

Dallas Fed Chief Richard Fisher spoke for the voice of reason when he pointed out the very limited scope of monetary policy to impact the real economy at this juncture.

The correct set of tools needed to pull the real economy out of its rut is to be found in the fiscal toolbox.

That being said, it is apparent that Bernanke will use any excuse to resume printing money again.

JP Morgan and Google both report earnings tomorrow.

Fasten your seat-belts.