For those of you who don't necessarily tune into chat or who may have missed it, here's a quick explanation for the big bounce back this afternoon.

First thing's first: today was a record-setting day in terms of the number of corporate bond offerings brought to market.  Market participants knew it would be active, but the turnout was bigger than expected.  The dollar amount, however, wasn't much bigger than expected (around $26 billion).  Bottom line, traders were braced for the impact of that supply in addition to the $21 billion in new 10yr supply today.  That's a ton of supply!!!

It's no coincidence that the rally began after the auction.  It had nothing to do with the auction being fairly strong (well, almost nothing), and everything to do with the day's supply pressure beginning to ease.  Not only was the Treasury auction over, but the corporate deals were beginning to "launch" and "price."  This allows any corporate rate-lock hedges (read: Treasury selling) to be unwound (read: Treasury buying).  It also lowers the speculative investor's defenses against the supply pressure, thus bringing in traders who had seen enough of a dip (both in terms of outright yields and their spreads vs shorter duration yields) to step in start buying again.