Thursday - March 27, 2014, 10:55am ET

Current Trend Direction: Sideways to Higher back above 200-day MA

Float/Lock Bias: Still Floating and riding the recent trend higher

Current Price of FNMA 4.0% Bond: $104.12, -3bp

Once again, Mortgage Bonds opened lower, but are now well off their worst levels of the day. Bonds shrugged off better than expected Claims data and an uptick in final Gross Domestic Product for 2013.

The Labor Department reported that Weekly Initial Jobless Claims fell to a four month low of 311K, down 10K from the previous week and below the 330K expected. The 4-week moving average of claims, which irons out seasonal abnormalities, declined by 9,500 to 317,750, the lowest since September. The drop in claims signals an improving labor market, but we'll have to see next week's March Non-farm Payrolls numbers for confirmation.

The final reading of 4th quarter Gross Domestic Product (GDP) rose to 2.6% from the previous reading of 2.4%, inline with estimates, but down from 4.1% recorded in the 3rd quarter. For all of 2013, GDP averaged 2.6%, a modest number considering how much and how long the Fed has been underwriting this recovery. Within the report, consumer spending rose by 3.3%, the biggest gain in 3 years - a good component of the report.

The data had little impact on the Bond markets. The Treasury will sell $29B 7-Year Notes with the results being released at 1:00pm and comes after yesterday's stellar performance from the 5-Year offering, which helped to boost the Bond markets.

Technically, the 4% coupon is trading right near resistance at the 200-day Moving Average. We are still floating and seeing if the recent positive trend in Mortgage Bonds can continue.

Joe Shamie NMLS # 241432

First Choice Loan Services NMLS # 210764

First Choice Bank NMLS# 177877

866-970-3400 x-5135

jshamie@fcbmtg.com