Markets were acting bullish once again with the S&P 500 gaining 0.49%. Some of the gains were likely attributed to positive earnings reports from financial institutions among others, and expectations that Greece might come to an agreement with bondholders. European and Asian markets rose as well.

An indication that investors don’t seem to be worried about Europe, the 10-year Treasury jumped up to a yield of 1.97%. Also, the Euro has risen back up to a level of $1.30/Euro, further echoing that sentiment.

In general, markets seem to be ignoring the recent European sovereign debt downgrades. Leading up to the crisis, investors placed their faith in optimistic ratings agency analyses that proved to be inaccurate. But now that ratings agencies are highlighting major Eurozone problems, investors don’t seem to care. However, I strongly believe the writing’s on the wall for Europe, and it’s not pretty.

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Markets appeared to be in risk off mode today as equities brought their bull horns out. The S&P 500 gained 1.11%. The NASDAQ also had a big day, gaining 1.53% to keep the tech rally going.

Also, the Euro bumped up to $1.29/dollar while the 10-year Treasury yield rose to 1.90%. I think there’s still plenty of risk left on the table, but this has been a precarious January so far to say the least.

Some of this exuberance could warrant some additional equity exposure, which we’ve done to a small degree. Some sectors have done especially well this year such as materials and financials although whether this can continue is the big question.

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Last week’s downgrades were forgotten as markets edged up today, with the S&P 500 gaining 0.36%. The optimism was seen across global indices while gold and oil prices pushed higher.

While global markets and commodities didn’t account for Europe’s troubles, the 10-year Treasury stood still at 1.85%. In the context of bond markets, investors continue to seek safer havens to store their assets, indicating perception of greater risk.

Elevated risk was seen in the form of the VIX, which rose 6.17% after a few weeks of relative inactivity. In essence, there’s still a lot of volatility in the market that can’t be ignored.

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