Tuesday - May 13, 2014, 11:10 am ET

Current Trend Direction: Sideways to lower

Float/Lock Bias: Floating

Current Price of FNMA 4.0% Bond: $104.97, +25bp

Weak economic data has pushed Mortgage Bonds into positive territory this morning, reclaiming a small portion of the 3-day decline in prices.

The Commerce Department reported that April Retail Sales rose by just 0.1% versus the 0.3% expected and down from the 1.5% that was recorded in March, which was revised up from 1.2%. When stripping out autos, sales were unchanged when expectations called for a gain of 0.6%. The spring thaw didn't turn out to be a boon for retailers when most pundits were looking for a positive turnaround after the big chill from winter. Retail Sales is a somewhat volatile, but this number stinks.

But now for the good news.small business optimism rose to a 6-year high in May as most employers surveyed expect the economy to improve. The National Federation of Independent Business Index rose to 95.2, up 1.8 points and surpassed the 95 level for the first time since October 2007. However, future problems seen by employers include taxes, followed by government regulations and red tape and poor sales. This was good report and we are going to discount the taxes, government regulation and red tape linehasnt that already been a headwind for this economy?

As expected, the price appreciation rate for homes has slowed and is expected to slow further. Case Shiller confirmed that home prices rose 11.3% in 2013, but see less than a 6% gain is seen in 2014. And between now and the end of 2018, they see prices increasing by a more modest 3.1%. Slower appreciation rates are fine and to be expected share this with your clients/referral partnercoupled with the lowest rates of 2014, it is good story for people sitting on sidelines.

Stocks are slightly higher after the S&P and the Dow both closed at record highs yesterday.

We are floating and watching Bonds carefully if prices can confidently bust above last weeks highs in the near future, we could see rates move lower to the best levels in quite some time.

Joe Shamie NMLS # 241432

First Choice Loan Services NMLS # 210764

First Choice Bank NMLS# 177877

866-970-3400 x-5135

jshamie@fcbmtg.com