The technical bounce in the markets continued with liquidity support coming from Central Bank players on both sides of the Atlantic.

It was risk-on mode with the corporate bond new issue pipeline gushing forth new deals.

New issue volumes are already over $20 billion for the week!

Judging by the demand for investment grade corporate bonds, it is clear that there is still a lot of investor cash sitting on the sidelines and that funding issues are not a serious consideration on this side of the Atlantic.

And with interest rates hovering at all-time lows, corporate issuers will continue to front-load the issuance calendar.

Get it while it's hot!

There has been heavy interest in Canadian paper; agency paper (i.e. Province of Ontario, Province of British Columbia) or covered bonds (i.e. covered bonds issued by Toronto Dominion or CIBC).

With investors preferring "safety" ("safe" being a very relative term these days), Canadian and U.S. paper continues to look attractive on a relative basis.

At a point, European paper is also going to start looking very attractive but when that happens is not quite clear.

Swiss bank UBS's shocking announcement of a $2 billion loss attributed to a "rogue trader" does not quite pass the "pee on my leg tell me it's raining" test.

The "rogue trader" allegedly played in equities; any sizeable position sufficient to cause a $2 billion loss could not have gone undetected for long.

As for the markets, to sustain this week's rally, we would need more stability and a change in fundamentals (not helped by today's poor Empire manufacturing figure).

With the risk pendulum having swung in a risk-positive direction this week (with higher stocks and lower Treasury bonds), we will likely see the pendulum swing the other way at some point before the end of this month.