Monday - April 28, 10:35am ET

Current Trend Direction: Sideways to higher

Float/Lock: Floating with hopes of doing so into Wednesdays Fed Meeting

Current Price of FNMA 4.0% Bond: $104.53, Unchanged

Mortgage Bonds tried to shrug off a sour opening and had clawed their way back to unchanged levels. However, they are now at session lows.

The Pending Home Sales report which came in slightly better than expected is the culprit for the modest sell-off in the Bond Markets. The rest of the week's calendar is packed with readings on manufacturing, GDP, housing, inflation, consumer spending and is capped off by the April Employment Report on Friday. It is expected that employers added 210K new jobs this month.

But the biggest news of the week will be Wednesdays Fed Meeting. We think the Fed is dead set on the course to continue tapering by $10B every month until QE3 is finished. The tapering has not hurt Bonds at all and in fact may be helping Bond prices as Stocks have gone nowhere in 2014. We see the Fed looking to get out of this unusual monetary policy and hope that there arent market disruptions. And frankly, no one knows what will happen with either Stocks or Bonds after the Fed exits, because this has been an ongoing monetary experiment.

Heres something to think about. The rally in Stocks is long in the tooth by any measure. With the Fed continuing to remove easy money, the economy really not heating up, Stock earnings guidance just OK and about behind us we are left to consider the old trading adage Sell in May and Go Away. If this is the case and Stocks take a hit, we see Bonds continuing their recent winning ways.

From a macro perspective we also see other reasons why rates may come down. First, Europe, the Euro is far too strong and inflation is dropping fastwe see QE coming to Europe, which will serve to hurt the Euro and help the US Dollar and US Bonds. China, is also a problem as is Japan. And the markets may just be underestimating the issues in the Ukraine. These are all potential reasons for a safe haven trade into the US Bond market.

Lets continue to float and try and do so into the Fed Meeting with an eye on the some of the macro issues above.

Joe Shamie NMLS # 241432

First Choice Loan Services NMLS # 210764

First Choice Bank NMLS# 177877

866-970-3400 x-5135

jshamie@fcbmtg.com