Stocks closed lightly in the red while corporate credit spreads were relatively unchanged even as corporate bond new issues steamed along.

Home sales numbers were better than expected, giving stocks a boost; corporate issuers took that as a cue to sell the bonds that they had been planning to sell yesterday (but could not because of the market volatility).

The sentiment for the overall market remains somewhat hazy much like the Icelandic ash cloud drifting across Europe.

Overnight, rating agency Moody's announced that it might downgrade several British banks; bonds for UK banks such as LIoyds and RBS opened 10-15 basis points wider.

The European peripheral story was mixed with Spanish and Italian bonds rallying even as Greece pushed out wider yet as the political situation there is mixed at best.

In flows, what is notable is that a lot of real-money accounts are not as enthusiastic about buying corporate bonds in this market, particularly given the continuing rally in treasury bonds.

Gold closed at $1,525 an ounce and oil closed at $99 a barrel; we may see a strong near-term bid for commodities even as the economic outlook remains uncertain; out of all the risky assets, players may still find relative solace in commodities.

Rail and leasing company GATX sold $250 million of 10 year bonds at +175 in one of the rare deals that performed very well in secondary trading.

Caterpillar issued a total of $4.5 billion in bonds in a multi-part offering to help fund its acquisition of Bucyrus.

Caterpillar sold $1.25 billion of 10 year bonds at +85, $1.25 billion 30 year bonds at +98, $750 million 3 year bonds at +50, and a total of $1.25 billion short-dated FRN (floating rate note) bonds.

Mining company Barrick Gold sold a total of $4 billion in bonds in a multi-part jumbo offering.

Barrick sold $1.35 billion 10 year bonds at +130, $1.1 billion 5 year bonds at +115, $850 million of 30 year bonds at +150, and $700 million of 3 year bonds at +90.

Credit Suisse issued $1 billion of 5 year covered bonds at +83.2 (mid-swaps +60); this bond also ripped tighter in secondary trading.

Durable goods order numbers are out tomorrow.