Friday - November 8, 2013, 10:25am ET

Current Trend Direction: Sideways to lower

Float/Lock Bias:Cautiously FloatingCurrent Price of FNMA 4.0% Bond:$104.41, -78bp

Surprise, Surprise!!

The delayed October Jobs report revealed that employers added 204K new jobs, well above the 100K expected while August and September numbers were revised higher by 60K! Good News is Bad News for Bonds and the report sent Mortgage Bond prices sharply lower, while the yield on the 10-Year spiked to 2.72%, up from the recent low of 2.47% on October 23.

Within the report it showed that the Unemployment Rate ticked up to 7.3% from 7.2% and was inline with estimates. Private employers added 212K jobs, above the 110K expected. However, a big slice of the job creation was in the service sector such as retail, bars and restaurants with modest increases in most sectors. Additionally, the Labor Force participation Rate fell to 62.8 from 63.2, at 35 year lows - some due to aging of the population, but in a recovery, the rate should be moving higher, not lower.

Rounding out the report it showed that hourly earnings fell to 0.1% from 0.2% while the average workweek came in at 34.4, inline. So a good report on the surface, but still hurdles to jump in the coming months.

Inflation remained tame in October as evidenced by the 0.1% increase in the Core PCE. Personal Incomes were steady at 0.5%, but higher than the 0.2% expected while Personal Spending slipped to 0.2% from 0.3%, inline.

Stocks, which have been Fed dependent, opened just modestly higher on the notion that the strong jobs report could bring the taper talk back into the picture at the December FOMC meeting.

Technically, the 4% coupon has fallen well below the 200-day Moving Average, so we would hope that your pipeline has been secured after yesterday's recommendation to lock in the short term.

On new transactions and with the Jobs Report behind us, consider floating. But be on guard should the selling gather steam.

Joe Shamie NMLS # 241432

First Choice Loan Services NMLS # 210764

First Choice Bank NMLS# 177877

866-970-3400 x-5135

jshamie@fcbmtg.com