Looking at the market today one could have been excused for thinking that the August sell-off never occurred.

Stocks got ahead of themselves in anticipation of the Federal Reserve's much touted "Operation Twist" program.

What is "Operation Twist?"

In layman's terms, the Federal Reserve is floating the idea of selling short-dated Treasury bonds in exchange for buying longer-dated Treasury bonds to bring down long-term interest rates.

President Obama is also preparing to deliver a special address on Thursday on jobs; 2012 is an election year.

The Obama administration is desperate to fix the employment picture ahead of the election.

Programs such as "Operation Twist" and the President's floated employment measures will not fundamentally alter the direction of the economy, however.

Much deeper reforms are needed and the sad truth is that President Obama lacks the political muscle to make it happen.

Too much goodwill was squandered with the Federal bail-out of the financial industry and the healthcare debacle.

With the U.S. dollar trading at 1.41 against the Euro (the Euro is down from 1.45 a few weeks ago) and demand for U.S. Treasury bonds strong as ever, investors are clearly bracing for tougher markets.

As for Europe, given how slow the decision-making process is moving it appears that a further leg lower is almost inevitable.

This raises an interesting point.

Decision-makers in Brussels and their counterparts in European capitals realize that they will face tough opposition from a European electorate to push through the fiscal union of Europe.

But if the markets drop precipitously, the European electorate may be more willing to accept the immediate costs of fiscal union.

In the U.S., if it were not for the steep market sell-off in late 2008, the Federal Reserve could not have opened the spigots of loose monetary policy without facing withering public opposition.

When folks are scared, they will typically say "yes" to just about anything that is sold to them as a fix.

So maybe the political foot-dragging in Europe is a more tactical play than many realize.

As expected, the corporate bond primary new issue machine kicked into high gear with deal after deal hitting the markets.

Several billions dollars worth of new deals were printed with some getting better traction than others.

The deals that got the most demand from investors were in the "safest" sectors like energy and utilities.

A Canadian covered bond deal from Toronto Dominion also saw heavy demand with a lot of rate players interested in it as it offers better yield than a pure sovereign bond.

Initial jobless claims numbers are out on Thursday.