The 10-year note, on the other hand, was helped by a repo squeeze and expectations of a renewed convexity bid after a 36.5% surge in home refinancing was reported early in the session. The 6-month, one-year bill, and two-year note led the day's rally, especially as hopes for an intermeeting Fed easing were revived.
Along with the increased demand for liquidity, the reduction in bill supply amplified the drop in rates. The two-year note also benefitted from the drop on Wall Street, as suggested by strong auction results. Technicals also accelerated the steepening play following the break of the 1998 wides at +114.1 basis points.