MBS are gradually leaking to weaker levels following the FOMC Announcement, chiefly because they got no specific mention other than to simply note that the MBS reinvestment policy is ongoing. Treasuries, on the other hand, go more time and money thrown at the Twist program–a result that markets largely expected.
Even so, current trading levels are within very tame distances of opening levels. Despite some volatile swings, MBS are only down another 3 ticks from pre-FOMC levels and Treasuries are about 4 bps lower (in 10’s). 30yr Treasuries have been a bigger beneficiary, but even they have not yet made it back to yesterday’s low yields.
So in the bigger picture, the move is extremely well-contained. Stocks and Treasuries look to have bounced higher from the initial knee-jerk, and markets are likely now waiting on FOMC Forecasts at 2pm before breaking beyond recent extremes. In the meantime, some lenders might consider repricing for the worse, but it’s not one of those “sure thing” sell-off’s. In other words, MBS aren’t free-falling here… simply struggling with some feelings of exclusion from the FOMC announcement. They’ll either get over it by the time 2pm data or the 2pm data will suggest a different direction or level of intensity.