Considering all the build up to Wednesday's FOMC events, the rally that followed was a breath of fresh air.  Not 12 hours later and bonds were already in the process of unwinding those gains.  Was this some sort of cruel joke meant to antagonize the origination community?  Can we catch a break or what?  First February, and now this?

No, Yes, Yes... in that order.

It's certainly not a joke, but neither is it serious.  It's simply a correction and corrections are necessary consequences of rallies.  Without corrections, prices would have to only ever move in one direction.  Even during times where it might seem like that's happening, some form of correction is always taking place at various intervals.  It's like a law of physics.  The lines of charted financial instruments are "bumpy." 

Volatility has been increasing in recent months and so what might look like mere bumpiness in the broader context instead feels like a personal insult on an intraday basis.  Rest assured though, if someone showed you the following chart at the beginning of March, you'd thank them.

Whether or not today continues in the same vein or if bonds resume their rally is more of a wild card.  There are no significant reports scheduled though there are a few Fed speakers about.  Futures and Options contracts are expiring, which can sometimes result in big trades for housekeeping reasons that other market participants deem significant. 

Finally, on a negative note, the corporate issuance calendar is expected to pick up again after Wednesday's rally.  This hurts MBS indirectly because companies that issue debt typically hedge their interest rate exposure by selling Treasuries (or using other financial instruments with an equivalent effect).  Some corporate debt also stands as an alternative investment to MBS and Treasuries, thus decreasing demand or motivating outright selling for the purpose of reallocating into what are usually better yields.