It's fashionable to criticize Fed Chair Powell for negatively affecting the bond market during his customary press conference on Fed Announcement days, but you can mark today as the 10th announcement in a row where rates moved lower versus the previous session.  In my view, Powell's greatest gift today was to simply stand aside and let the market do what it was already inclined to do.

In other words, bonds have been inclined to move lower in yield throughout this week's coronavirus news cycle.  They took a break (i.e. underwent a bounce in levels due to technicals and positioning) from that mission yesterday, presumably (hopefully?) for some other reason than to embark on an epic bounce that took rates back up to recent highs.  After all, it's not unheard of to see trends pause on the eve of Fed announcements.  And now they're free to go about their business.

That explanation looks increasingly plausible in hindsight as bonds were already taking a friendly lead-off ahead of the announcement.  As Powell spoke, it became clear there were no whammies for bonds.  There were even a few moderately friendly anecdotes (convicted about fighting low inflation, concerned about coronavirus, asset prices may be a bit too high, balance sheet is just barely high enough, manufacturing not in recovery yet, etc.).

Stocks didn't sell-off in any crazy sort of way, but they did sell-off!  Bonds benefited a bit from that, both at 9:30am and again after the Fed.  10yr yields ended the day down more than 7bps while MBS only managed to gain an eighth of a point.  Reasons for underperformance have been a constant topic of discussion in the MBS Live Huddle, including today's.