As far as Fed days go--especially the kind where we get updated economic projections--today's example was pretty damn uneventful.  These things happen from time to time, but this wasn't exactly a day where a "dud" announcement was seen as being very likely.   Markets were hungry for clarification on the Fed's rate outlook as well as any response to the short-term funding market woes of the past few days.

I could weave a bit of a tale for you about how the market moved in a big way ahead of the announcement due to expectations for certain changes/inclusions and how it simply unwound that movement when it didn't get what it was looking for, but that would be giving too much credit.  It's true that expectations ramped up a bit for a slightly friendlier Fed than we got, but longer-term yields had only barely dipped their toes back in August's post-NFP range at today's very best levels.  In other words, it wasn't exactly a huge lead-off.

Heading back the other way was just as average with bond ending almost perfectly unchanged (unless we're talking about 2yr Treasuries, which were a bit more upset at the Fed's rate hike outlook).  Powell couldn't have been more matter-of-fact.  The Fed doesn't see a recession coming (they'd never say so anyway), nor do they see anything other than a simple little miscalculation of liquidity behind yesterday's repo rate drama.  Move along.  Nothing to see here.  They'll hike/cut/ease/tighten if they need to based on evolving market conditions.  While that's exactly in line with what I said they'd say, I never imagined bonds would be this flat in response.  The icing on the cake?  Today's volume was the lightest in the past 6 trading days!


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 3.0
101-02 : +0-02
Treasuries
10 YR
1.8000 : -0.0140
Pricing as of 9/18/19 5:48PMEST

Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
2:42PM  :  ALERT ISSUED: Negative Reprice Risk Increasing More Meaningfully Now
2:23PM  :  ALERT ISSUED: Very Slight Reprice Risk as Traders Position For Powell
2:21PM  :  Fed Bullet Points (Shockingly Unchanged Statement)
2:04PM  :  First Move After Fed is Weaker
12:09PM  :  Bonds Taking Friendly Lead-Off Ahead of Fed

MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Matthew Graham  :  "RTRS - FED'S POWELL SAYS WE ARE PREPARED TO BE 'AGGRESSIVE' IF IT TURNS OUT TO BE APPROPRIATE"
Matthew Graham  :  "FED'S POWELL SAYS FOR THE FORSEEABLE FUTURE WILL LOOK AT DOING TEMPORARY MARKET OPERATIONS TO DEAL WITH LIQUIDITY CRUNCHES"
Matthew Graham  :  "FED'S POWELL SAYS THERE IS REAL UNCERTAINTY AND CERTAINLY POSSIBLE WILL HAVE TO RAISE BALANCE SHEET EARLIER THAN THOUGHT"
Matthew Graham  :  "RTRS - FED'S POWELL SAYS WILL PROVIDE SUFFICIENT SUPPLY OF RESERVES SO THAT FREQUENT USE OF SUCH MEASURES ARE NOT NECESSARY"
Matthew Graham  :  "RTRS - FED'S POWELL SAYS THERE ARE RISKS TO THE POSITIVE ECONOMIC OUTLOOK, WILL NEED MORE RATE CUTS IF THERE IS A DOWNTURN"
Matthew Graham  :  "RTRS - FED'S POWELL SAYS WILL CONDUCT OPERATIONS AS NECESSARY TO ENSURE INTEREST RATES IN TARGET RANGE"
Matthew Graham  :  "That was a shockingly unchanged statement given what's transpired in the past month."
Eric "Leo" Sayer  :  "Wait until they ask the first question about repos...bond yields jump"
Brian Bockholdt  :  "Def fear the presser"
Rob Clark  :  "He still gets to mess up the presser."
Matthew Graham  :  "FED'S MEDIAN VIEW OF FED FUNDS RATE AT END-2021 2.1% (PREV 2.4%)"
Matthew Graham  :  "FED'S MEDIAN VIEW OF FED FUNDS RATE AT END-2020 1.9% (PREV 2.1%)"
Matthew Graham  :  "FEDERAL RESERVE'S MEDIAN VIEW OF APPROPRIATE FED FUNDS RATE AT END-2019 1.9% (PREV 2.4%)"
Matthew Graham  :  "FED CUTS TARGET INTEREST RATE 25 BASIS POINTS TO A RANGE OF 1.75-2.00%, AS EXPECTED"

Economic Calendar
Time Event Period Actual Forecast Prior
Wednesday, Sep 18
7:00 MBA Purchase Index w/e 269.7 253.5
7:00 Mortgage Refinance Index w/e 2274.1 2377.5
8:30 House starts mm: change (%) Aug 12.3 -4.0
8:30 Housing starts number mm (ml)* Aug 1.364 1.250 1.191
8:30 Building permits: number (ml)* Aug 1.419 1.300 1.317
8:30 Build permits: change mm (%)* Aug 7.7 6.9
14:00 FOMC rate decision (%)* N/A 1.75 - 2.00 1.875 2.125
14:25 Powell Press Conference *