Monday - December 2, 2013, 11:05am ET

Current Trend Direction: Sideways to lower

Float/Lock Bias:Carefully FloatingCurrent Price of FNMA 4.0% Bond: $104.06, -25bp

Mortgage Bonds begin the last month of 2013 to the downside as Traders position themselves ahead of this week's economic data that ends with the closely watched November Jobs report on Friday morning.

The Street will also see readings on housing, manufacturing, GDP, consumer spending and inflation. There are no Treasury Bond or Note auctions this week.

The Stock markets have had an incredible run this year with the S&P 500 up a whopping 26.5%, its 8th best year since 1947 thanks to the Fed and QE3. The Fed buys Bonds from the big Wall Street dealers and that money has gone to work in the Equity markets. Look out below once the Fed takes away the punch bowl.

Over in the mortgage market, the chief economist at Freddie Mac, Frank Nothaft, said last week that he predicts that not only is 2014 to be a year of stepped up regulations in the sector, he also sees mortgage rates getting close to 5% as the Fed begins to scale back on its current QE program. Mr. Nothaft sees an announcement of scaling back in the first half of the year and says that when such a big buyer begins to taper its purchases, home loan rates will begin to rise.

Technically, Mortgage Bonds are currently at the lower end of its short term trading range. We will begin the day Floating to see if support can hold. But be ready to Lock during the day as portfolio managers will start to square up positions and close the books for the year.

Joe Shamie NMLS # 241432

First Choice Loan Services NMLS # 210764

First Choice Bank NMLS# 177877

866-970-3400 x-5135

jshamie@fcbmtg.com