Heading into today, the afternoon's FOMC Announcement had the first right of refusal when it came to moving markets.  As it happened, it was the morning hours that ended up setting the tone for the entire day, and by a wide margin at that.  In fact, the FOMC Announcement ended up being swallowed up by the mere remnants of tradeflow momentum from European hours.  What happened here?

First of all, be sure to see that MBS are only down 2 ticks on the day.  Treasuries are worse off and have given an increasingly negative technical signal, but as far as today is concerned, MBS ended up taking minimal damage.  Even Treasuries held their own when compared to German Bunds.  And with that, we finally get to the heart of the movement.

Keep in mind that Germany IS the "European bond market."  10yr German Bunds are the benchmark for the Eurozone because they trade in the highest volume and are in the most abundant circulation.  If you go into an imaginary bond store and ask for a 10yr European government bond, you'll be handed a 10yr Bund.  With that out of the way, Bunds tanked today, utterly.  They'd been sort of toying with the notion of putting in a big-picture bounce off resistance that's been in place since mid-April and today was the day they really confirmed a move in the other direction.

Treasuries took some direction from this in the overnight session, but with GDP on the horizon, and after selling off quite a bit on their own in the previous session, were able to hold their ground fairly well.  After GDP came out, it looked for a brief moment like that ground-holding was the right idea, but by 9am, they were swept up in a full-scale snowball sell-off.    This is frustrating to watch because there's no layperson explanation for the weakness.  It had nothing to do with GDP.  GDP was a speedbump for something that was already in motion.  It ran it's course by 9:10am Eastern and that was the end of the day--really.

Yields never went higher than that and never went lower than opening levels.  9:10am hit and bond markets drifted sideways in the bigger picture.  The next biggest event in terms of sustained volume was at 1pm, which marked the end of the week's auction cycle and perhaps more importantly, the European close.  In the chart below, the purple bars are volume and the gray line is 10yr yields.  Notice that everything important happened in the morning.  GDP was a speedbump.  9am didn't coincide with anything but tradeflow shifts (hence the "???"), and the FOMC Announcement merely brought volume with no movement behind it. 

2015-4-29 Yields and Volume


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
101-26 : -0-02
FNMA 3.5
104-26 : -0-01
FNMA 4.0
106-29 : +0-02
Treasuries
2 YR
0.5630 : +0.0000
10 YR
2.0460 : +0.0430
30 YR
2.7590 : +0.0551
Pricing as of 4/29/15 5:06PMEST

Today's Reprice Alerts and Updates
A recap of Alerts and Updates provided to MBS Live subscribers.
2:20PM  :  Notable Changes in FOMC Statement
2:05PM  :  Knee-Jerk Weakness After Fed, but Bouncing Back Now
9:10AM  :  ALERT ISSUED: Markets Shrug Off Big GDP Miss; Europe Hurts Overnight; Technical Break in Control

MBS Live Chat Highlights
A recap of featured comments from the Live Discussion on the MBS Live Dashboard.
Michael Gillani  :  "They may not raise rates until 2016 but if they set this tone for chaos surrounding their meeting each month moving forward like they did with QE ending, we'll see higher rates right away as the drama drags out over the next 8-12 months so it will be the same as if they raised them now anyway. I see May 2013 re-incarnating before our eyes!"
Victor Burek  :  "let the reprices better start"
Hugh W. Page  :  "This sentence at the end of the 3rd paragraph indicates to me they want to see more improvement before moving. "The Committee anticipates that it will be appropriate to raise the target range for the federal funds rate when it has seen further improvement in the labor market and is reasonably confident that inflation will move back to its 2 percent objective over the medium term.""
Hugh W. Page  :  "Dovish"
Matthew Graham  :  "RTRS- FED REPEATS RISKS TO ECONOMY AND LABOR MARKET REMAIN NEARLY BALANCED"
Matthew Graham  :  "RTRS - FED REPEATS IT WILL RAISE RATES AFTER FURTHER IMPROVEMENT IN LABOR MARKET AND WHEN IT IS "REASONABLY CONFIDENT" INFLATION WILL MOVE BACK TO ITS 2 PCT TARGET"
Matthew Graham  :  "RTRS- FED SAYS INFLATION REMAINS BELOW OBJECTIVE, PARTLY REFLECTING LOW ENERGY PRICES, AND IS ANTICIPATED TO REMAIN LOW OVER NEAR TERM"
Matthew Graham  :  "RTRS - FED SAYS SLOW START TO YEAR PARTLY REFLECTS TRANSITORY FACTORS"
Matthew Graham  :  "RTRS - FED SAYS GROWTH SLOWED, JOB GAINS MODERATED AND LABOR UNDERUTILIZATION CHANGED LITTLE SINCE LAST MEETING"
Matthew Graham  :  "In other words, given the big rise in yields this morning, the results should have been even better."
Matthew Graham  :  "B+ in and of itself. C- in context"
Matthew Graham  :  "RTRS - U.S. SELLS $29 BLN 7-YEAR NOTES AT HIGH YIELD 1.820 PCT, AWARDS 91.10 PCT OF BIDS AT HIGH"