Thursday - May 15, 2014, 11:40 am ET

Current Trend Direction: Sideways to higher

Float/Lock Bias: Floating

Current Price of FNMA 4.0% Bond: $105.66, +25bp

Werent Mortgage Bonds supposed to fall off a cliff after tapering was to begin? Mortgage Bonds now stand at the best levels of 2014but smack at resistance at highs seen last October read on.

Yesterday the hot wholesale inflation number was posted. And this AM, the Labor department reported that the headline Consumer Price Index (CPI) posted its biggest increase in April since last summer rising by 0.3%, in-line with estimates and up from the 0.2% recorded in March. The gains were led by rising costs for housing, food and gasoline. The Core CPI was also inline at 0.2%. The year-over-year numbers also increased - CPI at 2% with the Core at 1.8%. The inflation numbers are still within the Feds comfort zone, but you can bet the Fed will be watching for a trend higher.

Americans filing for first time unemployment benefits fell to lows not seen since May 2007 as the labor continues to improve. Weekly Initial Jobless Claims fell by 24K to 297K, below the 325K expected. Rounding out the data was a better than expected NY State Manufacturing Index coming in at 19.0 in May, well above the 4.8 expected.

Technically, we are encouraged by the gains but need to be more cautious and mindful that the last time Bonds were at these levels last October, price dropped like a rock.

Joe Shamie NMLS # 241432

First Choice Loan Services NMLS # 210764

First Choice Bank NMLS# 177877

866-970-3400 x-5135

jshamie@fcbmtg.com