Let's cut right to the chase...  Although the 5yr auction earlier today was strong and although there were several paragraphs-worth of content in today's FOMC statement, today has been almost exclusively about one thing: a shift in verbiage of the FOMC statement from suggesting low fed funds rates through "mid-2013" to today's "late 2014."  That was the big market mover at 12:30 that kicked off a big rally for MBS and Treasuries.  The rally was a bit more aggressive than the "relief rally" that markets seemed to be expecting upon confirmation that 2014 verbiage was included, ostensibly because the FOMC went the extra step of saying "LATE 2014."  here are the two relevant sections of the statements from last meeting and today's:

December 13th Meeting

"The Committee also decided to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that economic conditions--including low rates of resource utilization and a subdued outlook for inflation over the medium run--are likely to warrant exceptionally low levels for the federal funds rate at least through mid-2013."

January 25th Meeting

"The Committee expects to maintain a highly accommodative stance for monetary policy.  In particular, the Committee decided today to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that economic conditions--including low rates of resource utilization and a subdued outlook for inflation over the medium run--are likely to warrant exceptionally low levels for the federal funds rate at least through late 2014."

Up until this announcement, both MBS and 10yr yields had been threatening to break out of their longer term ranges, both in terms of recent bullish trends and even the more conservative horizontal pivot points that marked ledges of sideways support.  After the announcement, both broke back into both of those trends, though an afternoon pull-back that coincided with the release of the FOMCs member forecasts provided an opportunity to take some profits and cast a bit of uncertainty as to whether or not bond markets and MBS were returning to bullish (diagonal and/or sloped) trends or simply back within horizontal ranges. 

Fannie 3.5 MBS... Same trend and pivot we've been following.  Big bounce at 102-19 confirms sideways support.

Similarly for 10yr yields, a big multi-day bounce off upper limits of horizontal range.  Maybe back into rally mode, maybe simply holding onto "sideways," but either way, we'll take it:

Volume was absolutely huge, which markets expected and indeed, seemed to have been gearing up for all week.  Now we attend to the battle between sideways and improving...  To assist in that, there's plenty of data left in the last two days of the week, including Jobless Claims, Durable Goods, New Home Sales, GDP, and Consumer Sentiment.  There's also a bit more supply to take down in the form of 7yr notes tomorrow.  Part of the weakness that followed the release of the FOMC Member Forecasts could be in preparation for that supply as well as the uncertainty of a reasonably healthy stream of data ahead.  On a final note, and by way of important caveat, we wouldn't ever completely take for granted the fact that "bond markets have bounced and that's that!"  Of course, there's no sure-thing when it comes to knowing what markets will do next, but the run up today and subsequent ground-holding at 2.10 for 10yr yields and 102-19 for MBS is a big victory for MBS watchers.  Enjoy it.