FOMC comments...

As expected the FED will not be extending the MBS purchase program.

Here are the comments from the meeting:

"To provide support to mortgage lending and housing markets and to improve overall conditions in private credit markets, the Federal Reserve has been purchasing $1.25 trillion of agency mortgage-backed securities and about $175 billion of agency debt, those purchase are nearing completion, and the remaining transactions will be executed by the end of this month... The committee will continue to monitor the economic outlook and financial developments and will employ its policy tools as necessary to promote economic recovery and price stability."

In addition the Fed commented on housing starts stating, "Housing starts have been flat at depressed levels," and reiterated its position on rates... stating the Federal Funds rate will remain low for an "extended period."

All things considered, this is what we were expecting.

Currently the market is up by 5 ticks after this report was released, an interesting move; we will see if these gains hold or if a late sell off ensues. Based on their exiting the MBS, these gains even if they hold will be short lived... come the end of March, expect the MBS to suffer and rates to rise as a consequence.