Mortgage backed securities (MBS) gained +57 basis point from Tuesday's close which caused fixed mortgage rates to improve.

Our benchmark FNMA 3.50 December MBS coupon made some good gains but was unable to break above an important technical resistance level.

At 1:03EDT we got our 10 Year Treasury Note Auction Results:$24B with a yield of 2.75%. The yield just prior to the auction was 2.734, so we had to pay more to borrow money on this new issue versus what was avail in the open market prior to the auction. The Bid-to-cover ratio of 2.70 is a slight pull back from our avg of 2.72. This was largely priced in and MBS had almost no reaction to the results.

We were confined to a well-defined trading channel, supported by our 100 day moving average and capped by our 50 day moving average.

MBS were shedding off some of their gains in the afternoon and were on a downward trend but then had a sharp reversal just before the bond market closed. This reversal was due to prepared comments by Janet Yellen. Here confirmation process begins Thursday in front of the Senate Banking Committee and her prepared statement was released a day early and once the bond market got ahold of it, bond pricing improved. This is because they viewed her comments as very "dovish" and may lead to their massive bond buying program staying in place longer.

Mortgage RatesAnthony HoodEquity Investment CapitalOffice: 949-891-0067Email: tony@equityinvestmentcapital.comwebsite: www.equityinvestmentcapital.com