The game is not over.  We didn't just miraculously win against all odds.  The sell-off that's plagued bond markets for the past 2 weeks can't yet be assumed to be defeated. 

That said, we stayed alive to fight another day.  Today's NFP numbers weren't too terribly bad.  Indeed, on most any other month, 223k payrolls versus a 224k forecast would be considered a strong report, but that's not what bond markets were worried about today.  They were worried about an exceptionally strong report that would unequivocally put the nail in the coffin of the long term rate rally and guarantee the fastest possible Fed rate hike timeline.

Today's report didn't drive said nail.  So we were left with a token bounce in the other direction that had EVERYTHING to do with Fed rate hike timeline adjustments.  It was a nudge--a very welcome nudge--but a nudge just the same. 

The problem with nudges is that they only serve as a short term course correction.  They don't generate their own momentum.  It very well may be the case that positive momentum will now take over in response to the weak momentum from the past few weeks, but that's entirely up to Europe, and almost not at all up to today's NFP numbers.  Europe barely budged today and even domestic bond markets didn't really get too excited.

Bottom line: we didn't lose our chance to keep bouncing in a positive direction, but neither did we confirm it. 

2015-5-8 bunds in context

MBS Pricing Snapshot
Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.
MBS
FNMA 3.0
101-16 : +0-12
FNMA 3.5
104-21 : +0-09
FNMA 4.0
106-27 : +0-03
Treasuries
2 YR
0.5720 : -0.0630
10 YR
2.1460 : -0.0322
30 YR
2.9000 : -0.0070
Pricing as of 5/8/15 4:53PMEST
Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
2:10PM  :  ALERT ISSUED: Losing Ground Into Afternoon Black Box Trading; Stay Frosty
8:49AM  :  First Move is STRONGER after NFP, but Germany Pushing Back
MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Sung Kim  :  "i see what u did"
Matthew Graham  :  "today's move is very very weak to confirm a reversal of a trend, you might say..."
Sung Kim  :  "today's move is very very weak to confirm a reversal of trend - IMO"
Matthew Graham  :  "As you guys know, I'm pulling for a bounce here. I think it was too far, too fast on the EU bond sell-off. They're still buying until mid-2016. But I have been and continue to be very freaked out by this move. I haven't and wouldn't bet against it, and I'm not totally convinced that today is enough to say it's defeated. "
Matthew Graham  :  "the more I do this, the less I'd listen to what anyone else has to say about where they think things will go next week."
Matthew Graham  :  "It's really up to Europe."
Matthew Graham  :  "I would really hesitate to pin down one's assessment of good vs. bad on one exact technical level. The 2.10-2.12 area is a bit of an inflection point. It wouldn't be outrageous to see a simply correction to the sell-off stop back here and continue weaker on Monday."
Matthew Graham  :  "just remember, this time last week, we were freaking out to be breaking above 2.10. And now today, you want to be excited even though we can't break back below?"
David de Courcy  :  "@Victor - you believe that lenders will continue to pass on gains through Monday? What if we get some retraction later in the day? "
Victor Burek  :  "but as SC said, if we hold here and no reprices better come, floating for sure"
Victor Burek  :  "that's why i said earlier, as of right now...i might change my stance later today"
Chris Kopec  :  "I'd favor locking prospects that were quoted a week ago and for whatever reason delayed committing until after the slide began. New prospects I would recommend lock also, mainly because Europe remains an "after hours" anchor that continually screws with late afternoon quotes. Just my $0.02."