Ever heard of Carlyle?  Is that like Cargill?  How about Veritas?  En vino?  No?

Well, 2 of the above are almost exclusively responsible for bond markets' ability to scrape together an unchanged day at the moment.  This all has to do with the corporate bond market.  Long story short, Carlyle is buying out Veritas and they were going to use upwards of $4 billion in corporate debt. 

The broader bond market was well aware of this and trading levels always do their best to adjust to the known quantity of supply.  In other words, traders have a good idea of the debt they might be able to buy.  When it comes to $4 bln in debt, you can be sure that more than a few traders are planning on buying and have had to sell other debt in order to make room for the anticipated purchase.

Normally, the new corporate debt would be issued, traders would bid, and life would go on.  But today's big deal was unexpectedly cancelled.  The reasons aren't important for our purposes, but for the record, Carlyle cites unfavorable market conditions.  What's important is that this immediately upset the balance of supply and demand in bond markets.  Traders suddenly found themselves with $4 bln more in buying demand than supply could accommodate.  Higher demand and lower supply make prices go up and yields go down. 

Indeed this is exactly what happened this afternoon, and there are no other satisfying explanations.  It was just barely enough to get MBS and Treasuries back to unchanged levels, but that was good for positive reprices considering the lower levels that began the day.