Before the Fed wrapped up QE purchases last year, the amount of movement we saw in the first few minutes of the day would have bordered on catastrophic.  This week, it's just another modest morning correction.  The really crazy thing is that this morning is nothing compared to the overnight session, and from there, the overnight session Treasuries is nothing compared to that of German Bunds.

And with that, we finally come to the star of the show.  German Bunds have been in the throes of an epic sell-off.  It's been far more abrupt than the mid-2013 taper tantrum sell-off in the US (read that again if you need to, because it's very telling when you think about how crazy mid-2013 was).  The past 5 sessions before today were the biggest culprit, but today's played an important role as you can see in the candlestick chart below. 

2015-5-7 bunds

You don't even need to know about candlestick analysis (or anything, really) to see that today was different.  In candlestick terms, we might call that a shooting star or inverted hammer.  Either way, it's a reversal signal from a purely technical perspective.  Personally, I'm not getting too excited about it just yet, because many times what seem to be reversal signals are simply expressions of exhaustion.  NFP tomorrow morning stands the best chance to cast a vote on whether today was merely a pause or the beginning of a bounce.


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
101-04 : +0-14
FNMA 3.5
104-12 : +0-12
FNMA 4.0
106-24 : +0-09
Treasuries
2 YR
0.6350 : -0.0040
10 YR
2.1780 : -0.0740
30 YR
2.9070 : -0.0990
Pricing as of 5/7/15 5:32PMEST

Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
10:38AM  :  Bonds Rally Back After Wild Night; Morning MBS Strength Presents Risks

MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Victor Burek  :  "i say the odds are 100% it misses estimates...just don't know to which side and how much"
Matthew Graham  :  "As I've said and will continue to say until tomorrow morning, the most interesting things we can observe would be a rally in spite of strong data or a sell-off in spite of weak data. Those are the only two learning opportunities for the big picture. "
Matthew Graham  :  "So it's really a waste of time to try to get in their heads. It's not a happy place to be."
Matthew Graham  :  "It's not that they're lying or trying to be manipulative. They're just not very good at their jobs from a private sector point of view."
Matthew Graham  :  "The problem continues to be that we're applying sound logic to the goings-on of a massive bureaucratic agency that doesn't necessarily do a great job of being competent or logical."
Matthew Graham  :  "All of the above add up to some general level of bearish or bullish outlook, and I have to tell you... I've seen really lop-sided sets of that data get completely punked by an NFP that goes in the complete opposite direction more times than I can count."