MBS MID-DAY: Bonds Stay Green After NFP, Fed-Speak, Greek Polls, Stocks, and France

It's been a surprisingly busy morning for financial markets, and very little of that has to do with NFP.  Bonds were slightly stronger overnight and after a small, but volatile reaction to NFP managed to hold inside yesterday's weaker levels.  In other words, 10yr yields ultimately lost ground following NFP, but didn't go any higher than yesterday's 2.02+ technical support. 

Further support came from slumping stocks and friendly Fed speakers in the 10am hour.  Around the same time, an updated Greek election poll showed the party favoring a Eurozone exit still in the lead.  As long as that continues to be the case, markets view the ECB as more resitricted in terms of the QE package they might announce (because Greek elections are on the 25th and the ECB announces on the 22nd).  Bottom line there is that  this dampens QE prospects and causes more concern over the global growth picture.

In the following hour, the hostage stand-off in France added more fuel to the market's "risk-off" momentum (risk-off = selling stocks, buying bonds, etc).

As is frequently the case, much of the positive momentum today was a factor of European markets.  Naturally then, as European markets closed, US bond markets stopped making gains.  Surprise surprise.  MBS and Treasuries have been drifting sideways to slightly higher since then, but are nowhere near revisiting this morning's weaker levels.