The FOMC Statement has been released.

Here is a quick recap from Reuters....

Fed cautious on recovery, focused on joblessness: The U.S. Federal Reserve gave a lukewarm economic assessment on Wednesday despite recent signs the recovery was strengthening, saying high unemployment still justified its $600 billion bond-buying program. In a statement following its policy-setting meeting, the central bank also said measures of underlying inflation were "somewhat low" although it acknowledged rising commodity prices that have fueled global inflation worries. It left its benchmark interest rate unchanged near zero, as was widely expected, and reiterated that rates would likely stay ultra-low for an extended period. None of the Fed officials dissented.

Market Reaction...

The bond market did not see "no news" as "good news". Benchmark 10 year TSY notes are teetering on a move through 3.42% support that might lead to another test of the cluster of support in the 3.46 to 3.50% area. Just as it played out on November 3rd when the FOMC announced QEII, the yield curve is notably steeper after the release of the FOMC statement today. Looks like fast$ traders went to work on auction concessions ahead of tomorrow's 7-year TSY note issuance....

Rate sheet influential MBS coupons are following the leader. FNCL 4.5s prices are lower. We are currently testing the outer limits of the FNCL 4.5s recent range.  I'm not showing any extension as the curve bear steepens. The downtrade has been orderly for production coupons (spreads not widening as TSYs sell off).

REPRICES FOR THE WORSE ARE VERY POSSIBLE

We aren't trying to take away a new big picture perspective from the FOMC statement. It was largely "as expected".   Day traders are driving this price action.