Monday - March 17, 2014, 9:57am ET

Current Trend Direction: Higher

Float/Lock Bias: Start day carefully floating

Current Price of FNMA 4.0% Bond: $104.31, -9bp

Mortgage Bonds are trading slightly lower so far today as prices continue to trade in a wide sideways pattern and above to 200-day Moving Average.

The Empire Manufacturing Index was reported with little fanfare, rising to 5.6 in March, up from the 4.5 recorded in February and in line with expectations. Within the report, the employment index was positive with small increases in employment levels and hours workeda good sign. A reading above 0.0 indicates improving conditions, below indicates worsening conditions.

Later this morning, the March NAHB Housing Market Index will be released with expectations of 50, up from the 46 recorded in February.

After erasing 2014 gains last week and being down 2% for the week, Stocks are starting the week higher, despite news that Crimea voted to break from Ukraine and join Russia. Stocks have been on a 5-year tear since the lows hit on March 9, 2009 at the height of the great recession. The S&P 500 hit 666, today it began at 1,841, up a whopping 176%. This rally is long in the tooth but will likely continue with the labor market showing some signs of improvement and the Fed still underwriting the recovery.

The U.S. and the European Union are expected to announce sanctions against Russia, which would include visa bans and potential asset freezes. President Obama stated that Crimea's vote "would never be recognized" by the U.S. and warned of further military action toward other parts of the Ukraine.

Technically, the 4% coupon is resting on support at the 50 and 100-Moving Averages and above the 200-day. We will continue to float, but we are extremely cautious given that prices can't break above overhead resistance. Stay tuned.

Joe Shamie NMLS # 241432

First Choice Loan Services NMLS # 210764

First Choice Bank NMLS# 177877

866-970-3400 x-5135

jshamie@fcbmtg.com