I wanted to check my understanding on something. Say bond A (deliverable, but not CTD) goes special (from GC) at some point. What can we say about how its basis should behave?
A. Firstly the bond should richen, therefore, its gross basis should widen (?) B. Also (and I think this is where my confusion is): being long the basis of this bond means that my carry gain/cost is now more +ve/less -ve, which again implies gross basis should widen?
But these are both part of the same effect. The richening of the bonds is due to them being cheaper to hold now with a special repo => my carrying cost of this bond is lower. Therefore, if I wanted to buy a bond with a duration of X, I am more inclined to select that with a special repo, than something on GC => there is a bid for this bond from this angle, causing the richening (as its carry will be better).
Just wanted to clarify my thoughts on this matter. Thank you.