Last week saw a reigniting of geopolitical risk on Thursday after headlines suggested the Crimean referendum as a potential powder keg over the weekend.  That led to a strong 1-day rally for bond markets, followed by a relatively more flat (but still slightly weaker) day on Friday.

That weakness may have been a warning sign that bonds had priced in as much geopolitical risk as they were willing to price in.  Today's ongoing move back toward weaker levels corroborates that.  Between the two days, Treasuries are a bit more than half way back to Thursday morning levels, and MBS are even closer.

At issue is the fact that there has been no immediately traumatic fall-out from Crimea's nearly unanimous vote to join Russia.  Whereas Secretary of State Kerry spoke of a "series series of steps" that would be taken by the EU and US if the referendum proceeded, so far that's merely amounted to "sanctions"--which don't quite ring the same alarm bells as military action.

The farther away the market moves from worrying about military escalation, the more of Thursday's rally we're likely to pay back.  The caveat is that the rest of the week should offer other reasons to move money with a more robust data calendar in general, and an FOMC Announcement on Wednesday.  Additionally, we're still not at a point where we can say the Ukraine situation is blowing over, but for now, that's the direction we've moved since Thursday.