Risks favor: Carefully Floating as Bond has bounced off 50-day MA

Current Price of FNMA 5.5% Bond: $100.50, -28bp

Bonds are trading lower, however, they are significantly improved from their worst levels of the day. The improvement occured right after the Bond tested its 50-day Moving Average floor of support.

In today’s economic headlines, the final reading on Fourth Quarter GDP was unrevised at 0.6%, and caused no market reaction. Initial Jobless Claims were reported at 366,000 – and while this is not a great number, it is an improvement from last week, and slightly worse than market expectations of 371,000. The four week moving average was reported at 358,000, which remains near levels seen prior to each of the last two recessions. Stocks actually moved higher on this news because it wasn’t as bad as anticipated. And as we typically see, the improvement in Stocks pressured Bond prices lower.

At 12 Noon ET, a parade of Fed officials will hit the mic – Fed President Dennis “the Spider” Lockhart, Fed President Sandra Pianalto and Fed President Gary Stern will be speaking, and their comments could potentially move the markets a little later today.

Bonds briefly dipped below support at the 50-day Moving Average before modestly improving. Hopefully, you locked on yesterday’s Alert and avoided this morning’s price loss. But now that the price damage is already done, we can Float very carefully on brand new transactions to see if Mortgage Bonds can remain above important support at the 50-day MA.