Thursday - February 13, 2014, 11:55am ET

Current Trend Direction: Sideways to lower

Float/Lock Bias: Carefully Floating as prices attempt to rebound back above the 200-Day Moving Average

Current Price of FNMA 4.0% Bond: $104.34 +25bp

Ongoing weaker than expected economic data gave Bonds a boost this morning.

January Retail Sales fell by 0.4% versus the 0.0% expected, lower than the -0.1% in December. Removing auto sales, sales were unchanged, below the 0.1% estimated. This was also down from the 0.3% in December, which was also revised lower from 0.7%. This was a bad reading.

The Labor Department reported that Weekly Initial Jobless Claims rose by 8K in the latest week to 339K and above the 335K expected. The 4-week average, which irons out seasonal abnormalities, increased to 336,750 from 333,250 the week before.

Economic data has been soft for the past several weeks following back to back poor Jobs Reports for December and January. Should this trend continue, the Fed's hands may be forced to do more...like taper the taper.

Part II of Fed Chair Janet Yellen's testimony on Capitol Hill has been postponed due to the winter storm.

Technically, the 4% coupon is trading near the "Triple Lindy" of support at the 25/100/2000-day Moving Averages. We are floating, but ever so carefully. This afternoon, more supply is coming to the market by way of $16B 30-Year Bonds.

Joe Shamie NMLS # 241432

First Choice Loan Services NMLS # 210764

First Choice Bank NMLS # 177877

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