Tuesday - April 1, 2014, 11:30 am ET

Current Trend Direction: Sideways to lower

Float/Lock Bias: Carefully Floating

Current Price of FNMA 4.0% Bond: $103.81, -16bp

Birds of feather flock together and yesterday Fed Chair Janet Yellen, who last week roiled Stocks by suggesting that the Fed Funds Rate (FFR) could be raised by early 2015 did a complete reversal and was back in the flock with the rest of the doves. Heres what she said, which leads us to believe that the FFR may go unchanged until 2016The U.S. economy is still considerably short of the two goals assigned to the Federal Reserve by the Congress of low and stable inflation and maximum sustainable employment.

Yesterdays Yellen speech and the prospect of lower rates longer than most could imagine failed to push Bonds back above resistance at the 200-day Moving Average. The Bond is still dealing with this ceiling so far this morning.

In housing news, CoreLogic reported that home prices, including distressed sales, rose by 12.2% year-over-year in February, which represents 24 months of consecutive year-over-year increases. From January to February, prices were up 0.8%. Corelogic forecasted that prices could rise by 10.5% year-over-year in March 2014 and 0.5% from February to March. However, despite the rosy gains, prices are still nearly 17% below their peak, which was set in April 2006. The big gains from 2013 are starting to cool and come back down to more normal historical levels.

We will start the day floating and closely watch whether prices can spring back above the 200-day.

Joe Shamie NMLS # 241432

First Choice Loan Services NMLS # 210764

First Choice Bank NMLS# 177877

866-970-3400 x-5135

jshamie@fcbmtg.com