Ahead of this week’s all-important Treasury refunding announcement, Nomura’s Charlie McElligott suggested Janet Yellen might endeavor to use the methods at her disposal to ease accumulated pressure at the long-end of the US Treasury curve.

The long-end selloff since August was down to a dramatic term premium repricing, itself attributable to the perception of fiscal profligacy and related supply concerns in an environment where the buyer base for Treasurys is increasingly comprised of price-sensitive investors who want to be compensated for any risk incurred.

Yellen had an opportunity to allay some of those concerns this week, which is precisely what she did with a lower-than-expected refinancing estimate and smaller-than-anticipated increases to 10- and 30-year auction sizes. The bond rally, which by Friday afternoon was quite substantial, kicked off with the refunding.

“In the minds of some people I’ve spoken to since, this move from Treasury is being viewed as equivalent to a first rate cut, as it relates to the magnitude of the financial conditions easing that it has spun-off, especially in conjunction with the global data downturn,” McElligott said.

The three-session decline in 10-year US yields was nearly 35bps by noon Friday, the largest three-session decline since SVB collapsed.

This is all “twist[ing] the screws on the USD rates / UST short covering and curve steepener unwinds, alongside even more constructive bullish flows in STIRS, which then set off a short-squeeze and exposure grab back into equities too,” Charlie went on.

If you ask McElligott, this might still be a range-trade, though. “Now that authorities have gotten their big financial conditions easing impulse with the long-end rallying sharply, equities up and ‘accident risk’ cooling, Treasury still has a metric ton of bonds to auction in the months ahead,” he wrote, with a chuckle.

You might be asking yourself why. Why would Yellen (and also Lael Brainard) want a rekindled “everything rally”? Doesn’t that risk stirring up the animal spirits and thereby inflation? Well, it’s simple: Yellen and Brainard aren’t at the “apolitical” Fed anymore.

“We are now pushing closer to the intersection of election-year politics,” McElligott remarked. “There’s a reason markets tend to rally in election years.”