If you're not up to speed on a few of the funniest scenes from Monty Python and The Holy Grail, this analogy is going to be tough to follow.  In the interest of not posting a link that could eventually die (you never know with copyrighted material on youtube), your best bet would be to google "Monty Python not dead yet."  And if all that sounds like too much work, here's a quick recap: a man with a bell and a wooden cart full of dead bodies is making his way through plague-stricken England, periodically shouting "bring out your dead!"  Another man, apparently carrying a dead body approaches to take advantage of the offer.  We soon learn the apparent corpse is "not dead yet" and hilarity ensues.

Today's apparent corpse was the bond market about half an hour after today's Fed Announcement.  Bonds were already in a defensive stance ahead of the Fed events and the 2pm data seemed to justify the defensiveness.  The announcement itself was actually a non-issue.  In fact, had that been the only data released at 2pm, there's a chance it would have resulted in a modest bond rally.  Instead it was the Fed's economic projections that did the damage.  Specifically, the "dots" (a tally of Fed members' rate hike forecasts) migrated dangerously close to a median view of 4 rate hikes in 2018.  In short, the Fed's rate hike outlook accelerated a bit more than markets anticipated.  

10yr yields were as high as 2.936 by 2:30pm--near death to be sure.  As Powell began his press conference, rates began to stabilize.  When Powell made a few comments that could have been interpreted in a positive way for bond markets, rates fell.  Little by little, our apparent corpse piped up and made its case for staying off the death cart--at least for today.


MBS Pricing Snapshot
Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing is available via MBS Live.
MBS
FNMA 3.5
99-21 : +0-05
Treasuries
10 YR
2.8812 : +0.0002
Pricing as of 3/21/18 6:06PMEST

Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
3:04PM  :  Bonds Liking Powell So Far!
2:37PM  :  ALERT ISSUED: Negative Reprices Becoming Likely
2:31PM  :  Here's Why We're Weaker (Breaking Down Key Changes and the DOTS)
2:03PM  :  ALERT ISSUED: Negative Reprice Risk Increasing After Fed
9:41AM  :  Bonds Pushing Weaker Limits Ahead of Fed; MBS Distortions

MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Matthew Graham  :  "takeaway: the Fed would be less hawkish to whatever extent fiscal stimulus fails to translate to economic growth"
Matthew Graham  :  "FED'S POWELL SAYS BROADLY SPEAKING PARTICIPANTS FELT THERE WOULD BE MEANINGFUL EFFECT FROM TAX CUTS"
Dominick Cordone  :  "this green gonna feel pretty darn good"
Matthew Graham  :  "I just did it. let's see what happens."
Gerry Suarez  :  "MG- I believe your alerts are triggering buying... no chance you might scream the sky is falling, would you?"
Jeff Anderson  :  "Quality update, MG. Thanks."
Matthew Graham  :  "
MBS Live Update Issued
Here's Why We're Weaker (Breaking Down Key Changes and the DOTS)"
Edgar  :  "We finish green"
Matthew Graham  :  "we haven't begun to see the final reaction yet"
Scott Valins  :  "too early"
Matthew Graham  :  "MEDIAN VIEW OF APPROPRIATE FEDERAL FUNDS RATE AT END-2018 2.125 PCT (PREV 2.125 PCT); END-2019 2.875 PCT (PREV 2.688 PCT): END-2020 3.375 PCT (PREV 3.063 PCT) LONGER-RUN 2.875 PCT (PREV 2.750 PCT) - FED PROJECTIONS"
Matthew Graham  :  "FED SAYS INFLATION ON 12-MONTH BASIS IS EXPECTED TO MOVE UP IN COMING MONTHS"
Matthew Graham  :  "FED SAYS ECONOMIC OUTLOOK HAS STRENGTHENED IN RECENT MONTHS"
Matthew Graham  :  "- FED MEDIAN PROJECTION SEES FED FUNDS RATE AT 2.875 PCT AT END-2019 COMPARED WITH 2.688 PCT IN DEC FORECAST"
Matthew Graham  :  "- FED RAISES VIEW OF ESTIMATED NEUTRAL FED FUNDS RATE FOLLOWING YEARS IN WHICH IT LOWERED ESTIMATES"
Matthew Graham  :  "FED RAISES TARGET INTEREST RATE TO 1.50-1.75 PCT, SEES TWO MORE RATE HIKES THIS YEAR FOR TOTAL OF THREE, SEES THREE MORE IN 2019"
Michael Baker  :  "I have a very simple policy right now CB... as soon as I get a contract in I lock. If I have serious clients already under contract on their house and they are out looking for a new one b/c they need a new house, I lock them too. Lock Lock Lock. And then I lock again."
Rob Clark  :  "I believe MG addressed that in the day ahead."
Charles Beasley  :  "Whats the consensuses on locking loans 30 to 45 days out?"
Dominick Cordone  :  "If the rate is there, lock. Nothing better than a locked pipeline. Period."