The Fed has just released the 29 bonds maturing between 2013 and 2014 eligible for monetization by the 11am deadline. And since the Fed has been purchasing notional way ahead of schedule, it may have far less dry powder to reliquify the market: today's auction will likely come at around $2 billion. Anything above that would mean that the Fed is monetizing about $35-40 billion a month, well beyond what it had telegraphed previously, and in essence is undergoing a real QE2 process.
The only question is whether the banks will use the new cash to buy stocks in today's smack down, or will they push the 10 Year further inside the 250 bps it was spotted last. The buyback will be complete at 11:00 am at which point we will discuss if Morgan Stanley continues to shine in its Fed frontrunning predictions.