A Sunny Day With Storm Clouds

Despite the dark news coming out of the Middle East, today was sunny in the bond and stock markets. It's possible that the latest geopolitical turmoil has caused the 10-year bond yield to fall to 4.65% today from 4.80% at the end of last week, reflecting a flight to safety, which may be giving stocks a lift. However, the dollar index (DXY) and the price of oil both edged down today.

Investors have learned to live with geopolitical risks recently in Ukraine, Taiwan, and now the Middle East. They remain more focused on the Fed, which might be done raising interest rates for a while given that the bond market has been doing so much heavy lifting of yields.