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Hotmail having a bad day
Looks like Hotmail / Microsoft is having a rather bad day. Their DNS seems to be intermittent. While they were down a while ago they were returning SERVFAIL for some DNS lookups, including MX lookups.
For senders who have the DNS data in their recursive resolvers, this will have no impact. For senders who either don’t have the data cached or who have the data expire before the servers come back online there may be a transient increase in the number of bounces at Microsoft domains (Hotmail, Outlook, MSN.com, office365.com and the Microsoft corporate domains including microsoft.com and their other domains like xboxone.com).
Most MSN online services (skydrive, officeonline, etc) were also down today as well. I saw quite a few comments on twitter.
Ive seen a few people speculate that this might be related to the Xbox One launch that is scheduled for tonight.