Stocks closed in positive territory even as a slew of see-saw headlines continue to stream out of the Eurozone.
Cash bonds are trading somewhat heavier than usual but this is probably due to the year-end liquidity factor as much as it is due to European chatter.
A handful of recent new corporate bond issues are performing extremely well in secondary trading while many financial new bond issues have been lagging in comparison with their spreads hanging out around new issue prices in secondary trading.
As much as the market is looking forward to Thursday's European summit, there is still a lot of risk aversion toward financials.
As if to demonstrate, there were a few chunky sized financial cash bond BWIC (bids wanted in competition) lists in the market with investors looking to sell off-the-run (old) financial bonds. .
Although there is still investor cash waiting to be put to work secondary and off-the-run bond spreads have lagged.
The lag is due to the massive primary bond supply and the preference by investors to stay as liquid as possible and thus deploy capital to new bond issues as opposed to off-the-run bonds.
Treasury Secretary Tim Geithner's involvement in the European situation shows Washington's unease at Europe's slow progress toward a fiscal union.
With global markets highly correlated with European markets, uncertainty from across the pond is affecting global investor sentiment.
That being said, one should not become too optimistic regarding Thursday's summit.
Even if important decisions are taken, those decisions will take time to implement and election risk may interfere with implementation schedules.
In Russia, talk of widespread demonstrations against the ruling party seems like hyperbole; Putin is still immensely popular with the Russian electorate and has a firm grip on the omnipresent security apparatus.
With oil trading above $100 a barrel, Russia still has deep pockets.
Trading volumes will remain relatively light this week.
University of Michigan consumer confidence numbers are out on Friday.