Thursday - March 13, 2014, 11:10 am ET

Current Trend Direction: Sideways

Float/Lock Bias: Carefully floating

Current Price of FNMA 4.0% Bond: $104.25, +9bp

Mortgage Bonds continue in their sideways pattern near key technical support levels, while being capped by better than expected economic data.

The Labor Department reported that Weekly Initial Jobless Claims fell by 9K to 315K versus the 329K expected, the lowest since the end of November. This was a good number and signals an uptick in the labor market. The 4-week moving average, which irons out seasonal abnormalities, fell by 6,250 to 330,500.

After falling for 2 months, Retail Sales rose by 0.3%, above the 0.2% expected, in February as consumers purchased a variety of goods, despite the harsh winter weather last month. When stripping out autos, sales also rose by 0.3%, above the 0.2% expected. Retail Sales make up about 1/3 of consumer spending, the main driver behind economic growth. If consumer spending can continue to expand, we will see economic growth beyond the recent 2% levels we have seen the past few years.

In the foreclosure arena, RealtyTrac reported that foreclosure filings in February declined by 10% from January and are down a whopping 27% from the same period last year. States with the highest foreclosure rates in February were Florida, Maryland, Nevada, New Jersey and Illinois.

Technically, the 4% coupon continues to trade near the triple layer of support provided by the 50, 100 and 200-day Moving Averages. Lets see if this support can hold beyond today's $13B 30-Year Bond auction. Recent history has shown that Bonds tend to improve once the auctions are behind us.

Joe Shamie NMLS # 241432

First Choice Loan Services NMLS # 210764

First Choice Bank NMLS# 177877

866-970-3400 x-5135

jshamie@fcbmtg.com