Wednesday - November 6, 2013, 10:55 am ET

Current Trend Direction: Sideways to lower

Float/Lock:Cautiously FloatingCurrent Price of FNMA 4.0% Bond: $104.97, +12bp

After yesterday's decline, Mortgage Bonds are trading slightly higher but beneath support at the 200 and 25-day Moving Averages - not a good sign.

There are no economic reports today, but the Mortgage Bankers Association reported that its Market Composite Index, a measure of total loan application volume, fell by 7% in the latest week. The MBAs refinance index fell nearly 8% while the purchase index declined by 5.2%. The sector could be easing a bit as consumers head into the holiday shopping season.

Over in the labor markets, outplacement firm Challenger, Gray & Christmas reported that planned layoffs rose by 13.5% from September to October, but fell 4.2% from October 2012 to October 2013. The planned cuts were in the pharmaceutical and financial sector. The report comes ahead of Friday's delayed October Jobs Report, which will be key in any decision making at the Fed for future plans on when to begin tapering QE, which we feel that the current $85B per month will remain into early 2014.

How do you keep easy money policies in place for a longgggggggggggg time? Lower the Unemployment target that would trigger increasing the Fed Funds Rate (FFR). With Unemployment at a skewed 7.2% and getting close to the 6.5% target, rumors are swirling that the target will be lowered to 6% or even 5.5%. This speaks loudly that the FFR will be held at current levels for a long time.

Technicals will now take a backseat to Friday's Jobs Report. After the fall through support at the 200-day Moving Average, Mortgage Bonds are trying to stabilize so we will try to float into tomorrow afternoon ahead of the report on Friday morning. Stay tuned.

Joe Shamie NMLS # 241432

First Choice Loan Services NMLS # 210764

First Choice Bank NMLS# 177877

866-970-3400 x-5135

jshamie@fcbmtg.com