Back in September, the epic corporate bond offering by Verizon (more than double the previous record!) proved to be such a factor for broader bond markets that it marked the first time we’ve discussed and individual firm’s corporate issuance.
While there’s no comparable deal in play at the moment, the corporate market is a big enough consideration this week that it’s been accounting for some of the paradoxical strength and weakness, running counter to the economic data or lack thereof. In this way, it’s like an unseen hand, and today it gave us a bit of a lift when we might have continued at weaker levels otherwise.
The weakness itself was easy enough to source. Empire State Manufacturing data was much stronger than expected and the uptick in producer prices certainly didn’t hurt. This took Fannie 4.0 MBS down to 103-14 at the weakest levels of the day, but we’re now drifting out at 103-19 thanks to afternoon improvements most likely driven by corporate rate-lock unwinds (read the Verizon piece above for more explanation on that).