Wednesday - April 9, 2014, 11:15am ET

Current Trend Direction: Sideways to slightly lower longer-term

Float/Lock Bias: Floating, supported by a triple layer of support

Current Price of FNMA 4.0% Bond: $104.12, -9bp

Light selling is pushing Mortgage Bonds into negative territory so far this morning.

Corporate earnings season kicked off yesterday with Alcoa reporting a profit decline due to a drop in aluminum prices. It is worth noting that earnings did beat expectations. Investors will be looking for the impact of the harsh winter weather for 1st quarter earnings, with signs of optimism for the 2nd quarter. And with the Feds stimulus ongoing, any dip in prices is looked at as a buying opportunity.

The Mortgage Bankers Association (MBA) reports that its Market Composite Index, a measure of total loan application volume, fell by 1.6% in the latest week for its 4th straight weekly decline. The refinance index fell 5% and is at its lowest level since the end of 2013. In addition, the refinance share of mortgage activity fell to 51% of total applications to its lowest level since July 2009. The purchase index rose by 2.7% as the spring buying season gets underway.

Later today at 1pm ET, the Treasury will sell $21B 10-Year Notes and comes after yesterday's solid performance by the 3-Year offering. Also garnering attention this afternoon is the 2pm ET release of the March 19 Fed Minutes. There may not be any surprises within the Minutes but we may see some market volatility in response to continued taperingso stay tuned.

Technically, the 4% coupon is resting on support at the 25 and 100-day Moving Averages with the 200-day below those levels. We continue to float, but be on guard with headline risk coming this afternoon.

Joe Shamie NMLS # 241432

First Choice Loan Services NMLS # 210764

First Choice Bank NMLS# 177877

866-970-3400 x-5135

jshamie@fcbmtg.com