And yes, Verizon's bond yields are attractive. The deal was cheap, which means the yields were higher.
But I can't help thinking there is a little more to this story: the demand was so strong it suggests that the investment grade community has priced in some tapering from the Federal Reserve. The near-term risks for a further backup in rates are limited or manageable, or why on earth would everyone be chasing prices higher, yields lower?
Speaking of the Fed, trader talk is increasingly turning to the Fed meeting next week.The consensus is for "taper light" of $10-$15 billion (to $70-$75 billion), with most if not all the reduction in Treasuries, not mortgage-backed securities.
One issue getting some attention is the 2016 Fed economic forecasts, which will be unveiled for the first time next week. There will be attempts to extrapolate from the Fed's estimates to a Fed fund rate for 2016. Everyone believes the Fed will by then have abandoned their zero interest rate policy (ZIRP), but where will Fed funds be? I've seen estimates anywhere from two to four percent. If the Fed believes we will be close to full employment by then, it will likely be closer to four percent.
But any of that talk will likely be downplayed at the press conference. Fed Chairman Ben Bernanke will emphasize that ZIRP will be in place for some time and that they remain "data dependent," meaning they could stop tapering and even reverse it if conditions warrant.
A Bernanke successor announced? There seems to be no consensus on when President Obama might announce a successor. But a small group thinks it is likely to be fairly soon--perhaps not long after the Fed meeting next week.