Mortgage bonds trying to find a level of support

Yesterday was a tough day for markets, as the FOMC minutes did not offer any clarity to the Fed’s tapering decision.  The minutes disclosed that members had strong opinions on both sides of the debate, which really only added to the confusion of the timeline.  That led both stocks and bonds to close lower at the end of the day, with mortgage rates pressured back up slightly above their 2 year highs.  Today, Initial Jobless Claims came in right at the estimate which was 13,000 higher than the previous week.  Stocks are trying to post gains, but they remain under pressure as the downward momentum for the month has the S&P 500 lower by more than 3%.  mortgage bonds are trying to find a level of support, but the sellers have continued to dominate any attempts by bonds to rally.  This repetitive pattern has put bonds into an oversold state, so we will start the day with a floating bias.  However, if we fall below current pricing, we will quickly move to a locking stance, as that would be a very negative signal for mortgage rates.