Bond markets have done a reasonably good job of not losing any more ground following the FOMC Announcement.  While it brought a solid amount of trading activity into the market relative to most of today, it remains completely dwarfed by the impact of this morning's GDP 'beat.' 

10yr yields got supportive in the 2.56% zone that we suggested 2 alerts ago.  This simply looked like the first major inflection point for any large sell-off today.  In other words, as far as "big, bad moves" go, this one was fairly logical so far.

Keep in mind that pit trading in Treasury futures closes at 3pm.  Bond markets can be less liquid for the next 2 hours (which we refer to as 'after hours').  This occasionally results in choppier movement.  All that to say, we're not out of the woods completely.  Holding sideways here is good for today if it stops the bleeding, but is also a logical place to rest if bond markets plan on marching higher in yield.

MBS have held up slightly better than Treasuries today, and have also held their ground since 1pm.  Fannie 3.5s are now down "only" 19 ticks (it was as much as 23 ticks earlier, or .71875).  Despite the ground-holding, we've lost so much ground today that some lenders could still have lingering negative reprices to get out.  Of course risks could also increase again if bonds slide in 'after hours' trading.

Some of the less consequential changes from last time to this time:

• "recent months" became "the second quarter" in addressing a rebound in economic activity
• Before: "labor market indicators generally showed further improvement"
• After: "Labor market conditions improved," but the Fed added that a range of indicators suggest a "significant underutilization of labor resources."  Maybe they get paid per letter?  I think that just means "labor market slack."  Or better yet, job market decent, but not great.
• Recover in housing sector now "remains" slow, vs "remained" last time.

And the biggest changes:

• After: "Inflation has moved somewhat closer to the committee's longer-run objective."
• Before: "Inflation has been running below the committee's longer -run objective

• Before: "labor market conditions will continue to improve gradually toward" levels the committee judges consistent with its dual mandate."
• After: "labor market indicators and inflation moving toward levels the committee judges consistent with its dual mandate."

• Before: "The Committee recognizes that inflation persistently below its 2 percent objective could pose risks to economic performance, and it is monitoring inflation developments carefully for evidence that inflation will move back toward its objective over the medium term."
• After: " likelihood of inflation running persistently below 2 percent has diminished somewhat."
   

Here's the full mark-up of past vs current FOMC Statements: http://www.mortgagenewsdaily.com/mortgage_rates/blog/381455.aspx

Basically, it's all about an incremental increase in the assessment of inflation.  It's fodder for the anticipated rate-hike being on track.  That said, it hasn't come as much of a surprise to markets.  Not only have bonds not moved much, but there hasn't been a major change in the shape of the yield curve either (and that's where we'd expect to see markets pricing in any major changes in the rate-hike outlook).

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