MBS and Treasuries started the day in slightly weaker territory after a fairly uneventful overnight session.  On NFP day, all eyes are on 8:30am anyway.  Payrolls printed moderately weaker than expected (209k vs 233), but with some strength in the internals (also some weakness in the internals!  We're looking at you, 'average earnings' at 0.0 vs 0.2 forecast!).

The result was a tepid rally for bond markets--one that now only accounts for half of the day's improvement in MBS.  The turning point came moments after the stronger-than-expected ISM data.  Bond markets moved weaker at first, but both MBS and Treasuries stepped in with supportive buying right at the post-NFP lows (or 'highs' in terms of yield). 

In other words, bond markets saw the extra weakness as a clear buying opportunity.  This is equivalent to showing one's cards, and the cards were more in favor of bonds than the data might suggest.  Big trades came across the CME's block trade screen at 10:30 and European bond markets joined in the rally full force.  All the while, domestic stocks were in the process of another swoon, beginning right in line with the bounce in bonds, taking the S&P lower by 15 points (on top of yesterday's already huge selling).

MBS Pricing Snapshot
Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.
FNMA 3.0
98-15 : +0-17
FNMA 3.5
102-11 : +0-15
FNMA 4.0
105-16 : +0-12
2 YR
0.4763 : -0.0627
10 YR
2.4962 : -0.0618
30 YR
3.2823 : -0.0307
Pricing as of 8/1/14 12:21PMEST

Morning Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
11:11AM  :  Bond Markets Hit Best Levels on Dodged Bullets and EU Help
10:11AM  :  Stronger ISM Manufacturing Data Trips up Bond Markets, but Only Temporarily
8:45AM  :  Bond Markets Move Into Positive Territory After NFP; Could be Better, Could be Worse

Live Chat Featured Comments
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Chris Hooker  :  "I cannot imagine strength until after ISM...still a waiting game. Plus, just like yesterday's weakness in stocks helped us from going further south quickly, today's recovery could dampen potential gains IMO"
Jeff Anderson  :  "Here it comes. Still digesting. Maybe the traders are on decaf this AM."
Andy Pada, Jr.  :  "none of the data which has been favorable to us has been able to dent the GDP momentum."
Matthew Graham  :  "would like to see some more strength than we're getting"
Sung Kim  :  "we are fine"
Andy Pada, Jr.  :  "this reaction doesn't bode well"
dshpuntov  :  "PS I'm loving the mobile version of the new site, MG"
Matthew Graham  :  "RTRS - U.S. JULY JOBLESS RATE 6.2 PCT (CONSENSUS 6.1 PCT) VS JUNE 6.1 PCT (PREV 6.1 PCT)"
Matthew Graham  :  "RTRS - U.S. JULY NONFARM PAYROLLS +209,000 (CONSENSUS +233,000) VS JUNE +298,000 (PREV +288,000), MAY +229,000 (PREV +224,000)"
Matt Hodges  :  "MG's commentary is short, sweet and on point. "