Corporate bond issuance is one of those slightly esoteric concepts to the average rate watcher and usually a completely foreign concept to the average mortgage market participant who develops an in-depth interest in understanding the bond market for the purpose of following mortgage rate trends. People who aren't too familiar with the impact of corporate issuance would be well within their right to question whether it was really the catalyst for Tuesday's big sell-off.
So let's put it all in context that leaves nothing to doubt: In terms of tranches offered, Tuesday was the 2nd highest day of corporate issuance... ever (incidentally, the record occurred last year on the Tuesday after Labor Day). In terms of outright dollar amount, it was the 7th highest, but importantly, it was essentially tied for 1st place among active issuance days (i.e. days that achieved big issuance with team efforts from multiple issuers as opposed to days that just happened to coincide with a single, massive offering).
For instance, the 2nd biggest corporate issuance day on record was $40bln and it had one single offering of $40bln (CVS, March 2018). The record day of $49 billion had a few other offerings, but a single deal from AB InBev accounted for $46 billion. Moving down to the 3rd and 4th slot, each had a large offering (more than $20 bln in both cases) that accounted for more than half of the day's total.
If we continue filtering out days with big individual deals, we find that 7 of the 11 days with $30bln+ total had one large deal that accounted for more than half of the total ($19 bln was the smallest of those, for what it's worth). Of the remaining 3, one can be thrown out due to its proximity to the Fed's emergency post-pandemic lending facilities. The remaining two days are yesterday, and the same day last year (Tuesday after Labor Day). All 3 of these days with big team efforts clocked in between $35 and $36 billion.
All that to say that yesterday could easily be described as one of the two most active days of covered in greater detail in the primer). Those are hedges (i.e. bond sales) that may end up being bought back in the hours and days following the launch of the bond in question.
While some of these rate-lock buybacks are contributing to today's stability, the bigger picture remains focused elsewhere. Sure, yesterday added insult to injury, but future injuries depend on economic data and the Fed's interpretation of it. To that end, we continue waiting on next week's CPI report as the biggest ticket domestically. Before that, tomorrow's ECB announcement is always worth some potential volatility. Today ends up being a place holder where yesterday's selling frenzy is able to level off right in the middle of the prevailing uptrend.