Stocks trailed in the red while there was a strong bid for U.S. Treasury bonds and Gold.

Driving the unease was a combination of tension in the Middle East and European economic weakness.

The macroeconomic recovery remains fragile and there are a slew of "known unknown" risk factors that could serve as exogenous shocks to the global markets.

Oil remained well bid.

The risk-on sentiment that has marked the corporate bond markets took a slight breather.

With stocks in the red, the primary new issue bond pipeline slowed a little after several days of frenetic activity.

While there was no panic selling of corporate or financial bonds by investors, demand for paper in the secondary markets slowed down.

New issue concessions (the extra spread investors are offered to buy primary bonds) are all but disappearing in a sign that investors have shifted focus from secondary off-the-run bonds to focus almost exclusively on primary new issue bonds.

Liquidity is at the forefront of investors' minds.

The little activity that there is in secondary trading seems to be driven by retail demand for USD-denominated bonds out of Asia.

In the credit space, the gradual return of investor appetite for CDOs (collateralized debt obligations) and MBS (mortgage back security) paper is an interesting trend.

The trend should not surprise anyone; it is the inevitable result of massive liquidity injections by Central Banks.

Initial jobless claims numbers are out on Thursday.