Some folks thought the Fed would hike today and others were pretty sure they wouldn't.  The hike camp was the minority according to most surveys and to Fed Funds Futures, but clearly had its best chance of a victory in 9 years.  The "no hike" crowd was a bit better represented, but they had a fairly common caveat that suggested the Fed would be hawkish about the prospects for a hike in October or December. 

In other words, the Fed probably wasn't going to hike, but they were going to offset that message by dialing up their perceived likelihood of hiking soon.  Simple plan!

As it happened, the Fed did exactly what it needed to do to make sure no one made the right call.  Of course, this wasn't the Fed's goal--merely a byproduct of whatever it was that possessed them to arrive at today's conclusions.  Those are as follows (based on the actual text of the announcement, the forecasts, and Yellen's press conference, all mixed with a bit of my own interpretation, which is mostly objective, to the best of my intellectual capability).

• The Fed is looking like it cares much more about inflation than it did even a few weeks ago.  Before, we had a Fed talking about inflation being likely to pick up soon.  Perhaps they were thinking that oil prices had bottomed out and were surprised to see them swooning again before this meeting.  Whatever the case, inflation (or lack thereof) was leaned on heavily as the reason for holding off this time around.
• It didn't stop there though.  Yellen also said that the unemployment rate approach was a flawed metric that understated employment slack.  So the Fed thinks things could be better on the job front as well.  It's unclear whether or not labor markets are strong enough for a hike, but the Fed has to say they're not because:
• Yellen also said that it didn't make sense to keep rates this low if EVEN ONE of the Fed's mandates was achieved.  Theoretically, that means full employment or price stability is enough to hike, without regard for the other. 
• While we're talking about mandates, it's interesting to note that there suddenly seem to be more mandates!  The Fed is writing its job description as it goes.  Specifically, the Fed is concerned about global growth prospects (not its job).  Yellen also made some conflicting comments about markets, in one breath saying the Fed need not be concerned with market reaction to Fed data, but in another saying that market stability was a concern.  Cake. Eat. too... Can't have it!

Bottom line, not only did the Fed NOT hike, but they were also WAY more gloomy about the near and long term outlook.  It really seems like they're not sure where inflation is going to come from now, or when.  It really seems like they're much more concerned that we thought about China and the global growth outlook (before, this was sort of an eyebrow-raising joke... now it's a real thing).

The net effect was clear on the short term rate world.  Here's a chart of December Fed Funds Futures:

Longer term rates may have benefited from the decrease in short term funding costs, but just as likely, they fed off the noticeable increase in economic bearishness.  They can also see the Fed is 'trending' toward a weaker and weaker assessment of either inflation or growth or whatever else it thinks its mandate is.  We can see that trend in the following chart from Jeoff Hall, Economist at IFR Markets (division of Thomson Reuters), which shows the evolution of the median Fed member forecast for the Fed Funds rate.

Long story short: another vote for this economic cycle topping out, and it seems like markets and the Fed are starting to realize it's a possibility.