Bond markets rallied rather impressively today following the FOMC Announcement.  Actually, it was really the Fed's economic projections (aka, the "dots") more than anything, that conveyed the Fed's dovish tone.  

In other words, the announcement itself wasn't especially enlightening.  In fact, it could have been taken to be on the hawkish side in parts (i.e. pointing toward policy tightening).  For instance, there were several small verbiage changes that upgraded the Fed's assessment of the labor market, downgraded global growth concerns, and acknowledged some progress in inflation numbers.

The caveat here is that an increased focus on inflation could be taken dovishly (i.e. in favor of easier monetary policy) because financial markets don't have a lot of belief or fear about strong inflation any time soon.  In other words, if the Fed is now focused mostly on inflation, they could be waiting even longer to raise rates and be doing it even slower.

All of this focus on the text of the announcement may be at moot point, however.  Instead, markets seemed more intently focused on the dots--the Fed members' economic projections which include the estimated Fed Funds Rate at the end of the year.  Market participants knew that the dots would show lower rates, but the confirmation was obviously worth something.  Whereas the average Fed member saw the Fed Funds rate at 1.375 at the end of 2016 in the December meeting, they now see it at .875.  This implies 2 hikes in 2016 versus 4 hikes previously.

The biggest winners were the shorter maturity Treasury notes, while 10yr yields and MBS only experienced a mild rally in comparison.  To emphasize the point, 3yr yields fell 11.7bps while 30yr yields only moved 1.8bps lower.   It was a good day for MBS nonetheless, with Fannie 3.0s ending roughly half a point higher than yesterday.