Monday - February 10, 2014, 11:30am ET

Current Trend Direction: Sideways beneath resistance

Advise Your Clients: Locking.

Current Price of FNMA 4.0% Bond:$105.09 +18bp

Mortgage Bonds continue to trade in a sideways pattern beneath a tough ceiling of overhead resistance, marked by the price highs seen back in mid-November.

There are no economic reports scheduled for today and the rest of the week's calendar is light with reports on Weekly Initial Jobless Claims, Retail Sales and Consumer Sentiment. However a fresh round of Treasury debt will hit the Bond market starting with $30B 3-Year notes tomorrow, $24B 10-Year Notes on Wednesday and $16B 30-year bonds on Thursday. With prices at a peak these auctions could weigh on the Bond market.

Fed Chair Janet Yellen will face her first test in her semi-annual monetary policy testimony in front of Congress this week. Ms. Yellen will be in front of the House Financial Services Committee on Tuesday and the Senate Banking Committee on Thursday. We expect Ms. Yellen to get grilled a bit by those critical of the Feds actions to see what her take on tapering QE3 and overall accommodative monetary policy.

Technically, if you look at the Bond in a quarter view, you can easily draw a horizontal line at $105.00, which continues to cap any Bond advance. We are continuing our Locking bias until such time that we can see the 4% close convincingly above the $105 level for two consecutive days.

Joe Shamie NMLS # 241432

First Choice Loan Services NMLS # 210764

First Choice Bank NMLS# 177877

866-970-3400 x-5135

jshamie@fcbmtg.com