CPI release was entirely on expectations because everyone knew fuel costs would surge. Since the shooting started in Iran, it has trumped everything. This was an inflation-on period, not risk-off. Yields have risen sharply from where they ended February.

You rewind to February 27th, people were ending the month with optimism for the U.S. economy and hope for lower rates. Then the shooting started. The fuel price increase is consistent with what we've seen at the pump and in oil prices.

Volatility creates opportunity. However, when volatility results from a military conflict involving the U.S., with an unpredictable course of action, you will be somewhat cautious in trying to take advantage. We are investors, not speculators.

We have made some adjustments as markets reacted to the unfolding conflict, as spreads widened and interest rates rose. We are looking for opportunity responsibly, not rolling the dice, because uncertainty is still quite high.

As you go further down the credit quality spectrum to high yield and emerging markets, the latter two will have higher overall spread volatility. We are somewhat neutral on investment grade but underweight and more cautious in high yield and emerging markets.

We are also looking for other opportunities, like mortgage CMO floaters. As volatility has surged, we're trying to look for opportunities to reduce volatility and still generate excess return.

The stock market seems to be more hopeful. Bond investors are traditionally more cynical or skeptical. There's a lot of reason for cynicism amid this confrontation.

The stock market is trying to shift back to the story that the economy is in good shape and corporate earnings are good. The conflict and the potential off-ramp from negotiations are allowing some optimism to return, but it won't take much. President Trump's comments remind people this has been unpredictable.