Fannie 3.5s are only 2/32nds off their highs for the day, so we're not quite ready to discuss reprice risk.  We can discuss the most recent bounce, however.

With the rise of bond-related ETF (exchange-traded funds) trading, bonds have been increasingly predisposed to volume and volatility that coincides with the 9:30am NYSE open (the time of day that many of the ETFs in question can be traded for the first time).

Yesterday saw the overnight strength turn an abrupt corner just after 9:30am, and now today's strength experienced a lower-grade version of the same phenomenon.  Volume (per minute) spiked to the day's highest levels from 9:30-9:40am and bond yields moved decidedly higher.

The damage is minimal so far, with 10yr yields still down 1bp on the day at 2.368.  Fannie 3.5s are still 1/32nd higher on the day at 102-11.  

Stocks accompanied the move, but have already nearly returned to pre-open levels (S&P futures).  Yen/$ also suggests the 9:30am "risk-on" move may have already run its course.