Bargain Buyers Emerge After Auction. Reprices for Better Expected

"Rate sheet influential" TSYs have found a bid after running into a key technical support level. To the delight of the dealer community, flows have shifted strongly in favor of "buying at the price lows" and rates are aggressively correcting.

The 10 year note is +0-02 at 101-24 yielding 2.431%. THIS CHART in the previous post calls attention to the technical support level that led to a reversal in flows.

The December delivery FNCL 3.5 is now +0-09 at 100-31, 29/32 above the price lows. Yield spreads are moving wider as TSYs rally and fast$ traders take profits on the basis, but price appreciations definitely warrant  REPRICES FOR THE BETTER.

...especially when you consider that rebate was reduced on average by 27bps today.

The Fed just released their schedule for Treasury purchase operations. They plan to reinvest $32 billion in MBS prepays into Treasuries over the next nine operations. This was about $2bn more than forecast and a likely catalyst for this reversal rally.