Tuesday - April 8, 2014, 11:00am ET

Current Trend Direction: Sideways to higher

Float/Lock Bias: Floating, but more carefully with prices at the 50-day Moving Average

Current Price of FNMA 4.0% Bond: $104.44, Unchanged

After a little post Jobs Report run up, it is not surprising to see resistance and the weight of this weeks Treasury auctions cap any further Bond advance. There are no economic reports due for release today. The Treasury will be selling $30B 3-Year Notes today with the results at 1:00pm ET and part of a total of $64B being offered this week.

The National Federation of Independent Business reported today that its Small Business Optimism Index rose 2 points to 93.4, mostly reversing the February decline, but failing once again to breach the 95 ceiling that has capped the Index during the recovery. Overall, the March gain more or less reversed the February decline. While the Index still cant seem to get above 95, we can be encouraged that the economy is at least crawling forward and not heading in reverse, said NFIB chief economist Bill Dunkelberg. This is a report we watch closely and we have not seen a real positive reading in several years. The economys 2% growth rate is simply not enough to instill confidence.

Quarterly earnings season kicks off today after the close of trading with Alcoa reporting its numbers. Due to the harsh winter weather, the numbers have been projected lower setting up opportunities for companies to exceed estimates. The closely watched S&P 500 has lost all of the gains so far in 2014 after the three day decline that began last Thursday. The specter of diminishing Fed stimulus coupled with profit taking is the why behind the downward pattern in Stocks.

Two caveats from last Friday's decent labor report. First, rising temp employment, formerly a leading indicator of full-time employment, is no longer. Since 4/10, the number of temp workers is up 58%, while overall employment growth is up 7.8%. Second, at 3.7 million, the long-term unemployed are 36% of all unemployed and at the current rate of decline, it'll take four more years for their ranks to return to normal.

Technically, the benchmark 4% coupon is trading near resistance at the 50-day Moving Average and the top of the Falling Channel. We are still floating, but much more carefully as Bond prices are ripe to pull back from this ceiling of resistance. Overall, rates have not done much and it is simply not worth losing any short-term gains.

Joe Shamie NMLS # 241432

First Choice Loan Services NMLS # 210764

First Choice Bank NMLS# 177877

866-970-3400 x-5135

jshamie@fcbmtg.com