As impressive a rally as the bond market staged today, economists say it will have difficulty moving further off its recent lows in the coming days and weeks -- unless

Fed

Chairman

Alan Greenspan

changes his tone or the

European Central Bank

decides to cut rates.

Odds that the Fed will raise interest rates at its next meeting on March 30 -- or at any time during the first half of the year -- may have plummeted today, they say, and that should be enough to keep Treasury yields under the six-month highs they reached last week.

But the economic report that triggered the move, the February

employment report, was almost too good to be true in a key respect. Next week's February

retail sales

report is expected to be very strong, reminding traders that the economy remains very powerful and the Fed unlikely to ease this year. And scheduled appearances by Greenspan may keep money on the sidelines.

After the 8:30 a.m. EST release of the February jobs report, Treasuries made a huge move. The long bond led the charge, shedding 16 basis points in yield to 5.54%. (Lately the bond was up 1 15/32 to 95 1/32, yielding 5.59%.) Traders were cheered by the combination of a strong-but-not-too-strong increase in

nonfarm payrolls

and a tiny increase in

average hourly earnings

. Large gains in average hourly earnings make traders worry that wage increases will translate into price increases.

"There's no doubt in our mind that there has been a visible shift in sentiment that does suggest the peak in Treasury yields did occur last week," says Bill Sullivan, chief money-market economist at

Morgan Stanley Dean Witter

. "It alleviates fears that the economy was overheating, and it gets us back to the theme that this is a recalibrated economy that can grow more rapidly while remaining free of inflation, compared to past eras."

But at the same time, Sullivan says, much of the buying that occurred today represented short-covering by traders expecting a larger-than-life payrolls number, as opposed to genuine interest in the market by investors who see good value in bonds at current yield levels. Given that, "we must determine what the true level of sponsorship for the market is," he said. "I'm not sure this triggers sufficient retail interest to propel prices higher."

Sullivan, a bond bull, focuses on the aspects of today's report that suggest that the economic data will continue to be market-friendly. Manufacturing payrolls continued to shrink, suggesting that the sector is "apt to act as a drag or retraining influence on the economy." And while the overall unemployment rate rose only a tenth, from a 29-year low of 4.3% to 4.45, the rate for adult males, which Sullivan says is key, rose from 3.4% to 3.7%. "So we have slack coming in that works against any flare-up in wage pressures anytime soon," he says.

'I don't think the rally will extend real far, principally because we still have solid growth in the economy,' says Daiwa's Michael Moran. 'I think we're going to see impressive statistics in the coming months, and I think that will leave the market nervous down the road about a pickup in inflation and possible Fed tightening sometime.'

But less bullish economists focus on the aspects of the report that may be less friendly next time around.

Michael Moran, chief economist at

Daiwa Securities

, says today's rally would have been impossible without the very small increase in average hourly earnings. Had the identical increase in payrolls been accompanied by a third consecutive 0.4% increase in average hourly earnings, "I think the market would have been down noticeably," he says.

Such an increase wouldn't have been surprising. The average hourly earnings series is notoriously volatile from month to month. While its annual growth rate has clearly eased, "the great reading we had for February probably had some downside noise in it," Moran says. "We could get an offset to that next month."

Looking beyond the employment report, other economic reports promise to refresh the view that while a near-term rate hike is no longer likely, the economy is no slouch, and a second-half hike can't be ruled out. The retail sales report is up first, next Thursday.

"I don't think the general picture of the economy has changed much," Moran says. "I don't think the rally will extend real far, principally because we still have solid growth in the economy. I think we're going to see impressive statistics in the coming months, and I think that will leave the market nervous down the road about a pickup in inflation and possible Fed tightening sometime. I think that will keep interest rates close to current levels."

Greenspan's public schedule may also hamper the market, Sullivan says. It's "another reason to be on the sidelines, so it may be difficult to get below 5.5% for the time being." While he may not talk about monetary policy, the Fed chairman has speeches scheduled for Monday and Tuesday next week, and two more scheduled the following week. An article in the current issue of

Business Week

says sources familiar with Greenspan's thinking say he "privately sees little justification for a rate boost," but in his most recent public comments he hinted that the Fed's third and final rate cut last fall may be reaching the limit of its usefulness.

If bond bulls have a single great hope, it may be that the European Central Bank, or ECB, cuts interest rates at its next biweekly meeting, March 18, said

Barclays Capital

senior economist Henry Willmore. He thinks the Treasury market is "priced right for more of the same -- strong growth, low inflation and no move from the Fed."

But if there's a sudden shift of focus back to the economic struggles being waged by much of the rest of the world, maybe the rally can continue. "Europe appears to be slowing and the ECB is likely to cut rates, which would be a positive external environment for the bond market," Willmore says. It won't necessarily act this month, though.