Monday - April 14, 11:15 am ET

Current Trend Direction: Sideways

Float/Lock Bias: Floating longer-term (weeks and months to closing) Locking shorter-term (days and weeks)

Current Price of FNMA 4.0% Bond:$104.56, Unchanged

Mortgage Bonds are still Happy and remain near the best levels of the year. Stocks are bouncing back after getting roughed up last week, but that is not stopping Bonds from clawing their way off the lows to trade back to near unchanged levels.

March Retail Sales rose by 1.1%, just above the 1% expected and up from the 0.7% recorded in February, which was revised up from the 0.3% originally recorded. It was the best monthly gain since September 2012. When stripping out autos, sales rose by 0.7% beating the 0.5% estimated. This is a decent report after Retail Sales declined in both December and January.

A confluence of mixed earning and economic reports, Stock weakness and geopolitical uncertainty in places like the Ukraine is providing enough bad news and uncertainty to give Bonds a lift. At the end of the day the tapering of QE3 was supposed to be bad news for Bondsbut that has not been the case. What has not been a surprise to us is the weakness in Stocks the minute the Fed punchbowl was starting to be tapered.

Lets be clear even though Bonds are Happy at the moment and longer-term looked poised to move sideways and even a bit higher, it is worth noting in the short-run, Bonds could easily get a little depressed and head back down to support at the layers of Moving Averages. For this reason we are still floating for any transactions closing longer-term as defined by weeks and months, but in the short run, a bias towards locking appears prudent, as rates are back near the lows of 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