The day is playing out perfectly in line with our discussion in The Day Ahead.  Because of Yellen's candor in conjunction with the mathematically simple adjustment to trading levels yesterday, there's little need to continue experiencing volatility due to uncertainty.  To reiterate:

Yesterday was abrupt because the adjustment to previous expectations was able to be priced in almost instantaneously.  We're not likely to be discussing an "ongoing reaction to changes in Fed policy" by next week in the same way it pervaded every waking moment of mid-to-late 2013.

Indeed it's already dying down, and those in the know have already moved on.  Think of this in the context of GDP tracking.  This refers to the running estimate of GDP that firms update mathematically based on incoming data.  For instance, if Business Inventories data surprises to the upside, firms update their GDP tracking based on whatever their equation might be.

While those equations can vary somewhat by firm, the point is that the Business Inventories data would have made for a mathematical, one-time adjustment.  The same can be said for firms' "rate-hike tracking" with the yesterday's forecast update being the catalyst for a similar mathematical adjustment.  The changes are plugged in to one side of the equation and the new expectations regarding interest rates can immediately be priced in to current trading levels.

As such, it's no surprise to see today's momentum lie in stark contrast to yesterday's precipitous movement.  Considering that economic data was mixed to slightly stronger, bond markets are doing "OK" in that they're slightly weaker, but not precipitously so.  MBS are just on the edge of suggesting an initial, small negative reprice, but not quite there yet.

MBS Pricing Snapshot
Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.
FNMA 3.0
95-29 : -0-02
FNMA 3.5
100-03 : -0-03
FNMA 4.0
103-17 : -0-05
2 YR
0.4319 : +0.0079
10 YR
2.7752 : +0.0032
30 YR
3.6507 : -0.0193
Pricing as of 3/20/14 12:57PMEST

Morning Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
10:21AM  :  Bond Markets Slightly Weaker After 10am Data
8:50AM  :  Bond Markets Fighting to Hold Ground After Claims Data

Live Chat Featured Comments
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Matthew Graham  :  "The Fed is in charge of how much money costs... What they say and do is very important."
Matthew Graham  :  "especially when we get instantaneous changes in stance"
Matthew Graham  :  "like 4 of the most dovish members moving their rate forecast a quarter point higher"
Matthew Graham  :  "Talking heads largely missing the point that it wasn't Yellen. It was forecasts."
Matthew Graham  :  "Stock markets tanked on Yellen because stocks are stupid compared to bonds."
Matt Hodges  :  "equities are stupid right now"
Hugh W. Page  :  "This was her first presser as chair. She and others will evaluate her performance and the impact of her words and we may see a different Janet next time who knows."
Christopher Stevens  :  "as Santelli says the smart traders work in Chicago"
Matthew Graham  :  "I'm fine with it. I think she should have been even more forceful with "6 months," and then offered a forceful caveat that she'd have no compunction in going well beyond 6 months if a, b, and c were still up in the air."
Christopher Stevens  :  "MG- I am guessing if she had to do it over that is what she would have done. "
John Tassios  :  "You hit it on the head MG, the FED committee members put out forecasts for where they feel FED Funds Rate will be in 2015, 2016, 2017 and on average it was plotted a bit higher by 1/4 point than market was expecting. I think it is called the FED's " Dot " Chart. Can you elaborate on that terminology?"
Ross Miller  :  "if a property is being sold Homepath Mortgage eligible can you do a regular fannie or Freddie mortgage?"
Jon Bodan  :  "RM, yes, but there is no contingency for appraisals in the contract. So there is actually a high likelihood, depending on market, that the value will not be there. I see that regularly in Atlanta...HP requires no appraisal but because of that the properties are priced above market here in a lot of cases."