Friday - February 7, 2014, 10:45am ET

Current Trend Direction: Sideways to lower

Float/Lock Bias: Locking - but read on and look at chart.

Current Price of FNMA 4.0% Bond: $104.94 +28bp

Lackluster. That is how to describe the January Jobs Report released this morning. Employers added just 113K new workers last month, below expectations of 175,000 and our own low numbers. Revisions weren't a big factor with Decembers sloppy 74K number raised just a paltry 1,000 to 75K, while November was revised higher to 274K from 241K.

The Unemployment Rate fell to 6.6% from 6.7%, but this is not necessarily a good metric of labor market health as the more important Labor Force Participation Rate remains at 63% and at a 35-year low. It is pretty clear to us that the Fed doesnt see the number as important as they have made it abundantly clear that the Fed Funds Rate will be held at current levels well past the time the unemployment rate falls beneath 6.5%.

After bouncing around post release Bonds are trading higher, but essentially flat on the week. Prices are once again trading up against a ceiling of resistance. If the Bond can break above this nearby ceiling, we would be much more optimistic. But until that time, clients should consider locking with prices near a ceiling.

Heres a thought longer-term almost everyone believes rates will be higher later in the year. And that just may be the case. BUT, even though the yield on the 10-Year Note is not where mortgage pricing comes from, is a good metric of the overall Bond Market. With that said, it is pretty clear to us that the Yield continues to fall in a very clear and well-defined technical channel. Maybe , just maybe, everyone will be wrong and we will be sitting on lower mortgage rates later this year. Pricing has certainly gotten better since tapering and we dont see the tapering being taperedso as Mordecai and Rigby on the Regular Show would sayLowerrrr RatesYay Huh!

Joe Shamie NMLS # 241432

First Choice Loan Services NMLS # 210764

First Choice Bank NMLS# 177877

866-970-3400 x-5135

jshamie@fcbmtg.com