Nice Reaction

The Federal Reserve Board decided to leave the Fed Funds rate unchanged. The comments released by the Board also made deflation less of an issue and put inflation out at a safe distance. The Mortgage Backed Securities (MBS) market ended Wednesday neutral and actually that was a very nice way to end a day with that much information. Thursday the market decided that the Fed had it right and MBS got a nice little lift above the 200 day moving average. Today we are watching the markets very carefully as much of the reports came in neutral. If the stock market decides to re-test and surpass the 200 day moving average for them, then bonds may pay the price. Volatility is still the name of the game and constant monitoring is all we can do.