Wednesday - December 11, 2013, 10:30am ET

Current Trend Direction: Sideways

Float/Lock Bias:LockingCurrent Price of FNMA 4.0% Bond: $103.59, -19bp

Lawmakers on Capitol Hill reached a bipartisan 2-year budget deal last night that would avoid another government shutdown. It looks like it will be approved, and the prospect of some clarity is weighing on Bonds a bit so far today.

At 1:00pm ET, the Treasury will be peddling $21B in 10-Year Notes and comes on the heels of yesterdays solid 3-Year Note auction. Otherwise, there no other economic news on the docket for today.

As longtime readers, you know we always like to float until the Fed Meeting just to hear what is said and see the subsequent Bond Market reaction. The problem? The technical picture for Bonds is not good and the Fed Meeting and Statement is still one week away.

We see the Fed tapering in March the earliest and the taper will be modest this just to appease the dissenters. This means Stocks are probably going higher. Couple that with the potential clarity in Washington, and you have the recipe for lower Bond prices.

Consider locking with prices near a ceiling and looking very vulnerable.

Joe Shamie NMLS # 241432

First Choice Loan Services NMLS # 210764

First Choice Bank NMLS# 177877

866-970-3400 x-5135

jshamie@fcbmtg.com