Monday - June 9, 2014, 10:20am ET

Current Trend Direction: Sideways

Float/Lock Bias: Cautiously Floating

Current Price of FNMA 3.5% Bond: $102.25, -16bp

Mortgage Bonds have been trapped in a sideways pattern for the past week as the 3.5% coupon trades just below resistance at the 25-day Moving Average. With no economic reports not due out until Thursday, the Bond markets will take their cue from the activity in the Stock markets.

Stocks begin the week with the Dow (16,924.28) and the S&P 500 (1,949.44) both closing at record highs on Friday after a bit better than expected May Jobs Report was released. Low interest rates fueled by the Federal Reserve has partially fueled the rally since the S&P hit 666 back on March 9, 2009 at the height of the recession. That's a whopping 192% gain for the S&P.

The Treasury is scheduled to sell a total of $62B in 3 and 10-year Notes along with 30-Year Bonds on Tuesday, Wednesday and Thursday and could impact trading when the auctions take place on Tuesday, Wednesday and Thursday. As mentioned, economic data begins on Thursday with Weekly Initial Jobless Claims and Retail Sales followed by Consumer Sentiment and the Producer Price Index on Friday.

Technically, the benchmark 3.5% coupon is trading just below resistance at the 25-day Moving Average and near the upper end of the year's trading range. We will continue to carefully float after locking into last Friday's Jobs Report. Have a great week!

Joe Shamie NMLS # 241432

First Choice Loan Services NMLS # 210764

First Choice Bank NMLS# 177877

866-970-3400 x-5135

jshamie@fcbmtg.com