If you've ever invested or even thought about investing, you likely have a magic number when it comes to the rate of return that would motivate you to pursue an investment.  What if I could guarantee you a 5% fixed rate of return for 20 years?  How about 4.5% for 10 years?  How about 4% for 5 years?  

Even if you wouldn't put all of your money into whatever underlying investment I'm trying to sell you, it's certainly worth a good, hard look for some of your lower-risk allocation.  

It just so happens that those rates (or something close to them) are indeed guaranteed today.  Well, they're as guaranteed as CVS can make them.  If you think CVS will fail, then I suppose they're not truly guaranteed.  Moody's thinks CVS is Baa1/Negative Watch, and S&P says BBB+/Negative Watch, whatever that means.  All I see is the yield that's high enough to compensate for any credit quality concerns.

Thousands of other investors are seeing the same thing, and opening their wallets and purses accordingly.  CVS's big bond deal hits today and at $40bln, give or take, it will be the 3rd largest corporate bond ever issued (next closest contender is a measly $22.5 bln).  That's $40bln that would otherwise be available to invest other places--much of it into other fixed-income products with a spread over Treasuries  (such as MBS!).  Simply put, big corporate deals sap demand from elsewhere in the market, and that hurts rates.

But of course this big corporate deal was expected.  Investors have known about it since CVS decided to acquire Aetna.  Even so, when we're dealing with amounts this big, a little bit of forecasting uncertainty in either direction amounts to billions of dollars, and that's more than enough to have an impact on today's bond market volatility.  Beyond the simple notion of supply and demand, the financial firms who hedge the deal for CVS are highly likely to be active in bond markets simply for hedging purposes.  With a deal of this size, such hedging will be pretty easy to detect. 

Today's biggest opportunity would be for bonds to bounce in a friendly direction after the CVS-related volatility passes (assuming the deal is priced during active trading hours).  If that happens, bonds will have a chance to maintain recently positive shifts in momentum.  But if it doesn't happen, those positive shifts may have run their course as of late last week.