At last, FOMC Day arrives... We've been waiting for this one--and less than patiently...  Two and a half weeks ago, we went into the NFP weekend with 10yr yields surging almost 20bps lower and were greeted not with any sort of volatile opposition to that rally, but rather an almost eerily quiet acquiescence.  Bond markets had been like a rabid dog since March 13th, and then in a relative instant, were ready for a calm walk on a short leash.  It took us a few days of observing the narrow range trade before figuring out what was going on, but on 4/13:

With more than a little bit of resignation, we commented this morning on the sense that the current range trade in bond markets won't get its most potent bit of information until the April 25th FOMC Announcement, and that 10yr yields, by default, seemed stuck in a 2.07-1.96 range until then. Even though some headline events could nudge us out of that range between now and then, "relatively flat, and wholeheartedly uncommitted" feel like the dominant themes since last week's NFP miss.

So it turns out we were wrong in our assessment of "wholeheartedly uncommitted."  Instead, bond markets have been only "mostly uncommitted."  What little commitment existed, was driving toward a generally higher price/lower yield scenario for MBS and Treasuries, albeit within the confines of the broader range.  Alas, our 2.07-1.96 call on the 13th was only "mostly perfect" (or mostly lucky?  we're not delusional) considering the 1.94% close on Monday.  Let the record show that 10yr yields made a point to go out the day before FOMC with a pivot higher back above 1.96%!

Surprisingly, dwelling on past anecdotes about where we think the market might be going isn't that important to us.  Yes, that was "neat," but it was also relatively safe.  More important matters are at hand now, namely, figuring out what happens next if either of the two red lines in the chart below are threatened after today's events:

We can't emphasize this enough: despite the fact that popular opinion would dictate that markets aren't expecting much from today's FOMC Announcement and press conference, that doesn't mean that mere changes in verbiage aren't more than sufficient to prompt a quick visit to either the higher or lower red lines.  

Keep in mind that the normal schedule of events is accelerated due to the presence of the press conference and member forecasts, so the Announcement itself happens at 12:30pm, with the forecasts and press conference at 2:00 and 2:15pm respectively.  Also keep in mind that there is other data today, including a 5yr Treasury Auction as well as Durable Goods in the morning, but these are mere supporting actors for the stars of the show in the afternoon.