Thursday - April 10, 2014, 11:25am ET

Current Trend Direction: Sideways

Float/Lock Bias: Carefully Floating

Current Price of FNMA 4.0% Bond: $104.66, +38bp

Mortgage Bonds continue to trade in a sideways to lower pattern within the Falling Trend Lines. Stocks opened lower despite a big drop in Americans filing for first time unemployment benefits and this is reason for the boost in Bonds.

This morning, the Labor Department reported that Weekly Initial Jobless fell by 32K in the latest week to 300K, near a 7-year low signaling the labor markets may be coming out of hibernation as spring blooms. The 4-week moving average, which irons out seasonal abnormalities, fell by 4,750 to 316,250.

The Minutes from the March 19 FOMC meeting were released yesterday, and the dovish tone gave Stocks a nice boost. The Minutes read, Household spending and business fixed investment continued to advance, while the recovery in the housing sector remained slow. Fiscal policy is restraining economic growth, although the extent of restraint is diminishing. Inflation has been running below the Committees longer-run objective, but longer-term inflation expectations have remained stable. The net of itQE3 is likely to end this at the end of this year and we should expect the Fed Fund Rate to remain unchanged until well into 2015.

The Treasury will be selling $13B 30-Year Bonds today with the results being released at 1pm ET and comes after 2 decent showing from the 3 and 10-Year paper.

Technically, the Bond has risen just above resistance at the 50-day Moving Average. That level would become support if the 4% could close above that level today. This afternoon's auction could offer some volatility so we will be closely monitoring the numbers when released. We will continue to carefully float.

Longer-term, we would be much more encouraged and optimistic if the Bond can break out of this Falling Channel.

Joe Shamie NMLS # 241432

First Choice Loan Services NMLS # 210764

First Choice Bank NMLS# 177877

866-970-3400 x-5135

jshamie@fcbmtg.com