Tuesday June 3, 2014, 10:15 am ET

Current Trend Direction: Sideways

Float/Lock Bias: Locking - but read onCurrent Price of FNMA 3.5% Bond: $102.38, -22bp

Note: Our focus has switched to the 3.5% coupon.

Mortgage Bonds are continuing to slide after yesterdays surprise ISM upward revision. Midday yesterday the ISM reported a very healthy revision to the most recent reading and cited a computer glitch. Stocks, which were lower at the time, love anything to do with good economic news and moved quickly higher. At the same time, Bonds, which dont necessarily perform well when good news is released, moved sharply lower and in a hurry.

With prices at one year highs, Traders have to be getting jittery ahead of the EU monetary decision on Thursday and the Jobs Report on Friday. If you think like a Trader, after a great run up in prices and with Bonds at a one year high, selling a booking a profit here looks very wise. And our clients should be thinking the same thing. Lock and dont wait for the magic 1/8th in rate!

Corelogic reported that home prices, including distressed sales, rose by 10.5% from April 2013 to April 2014, which is down from the 11.11% that was reported annually in March. From March to April, prices were up 2.1%. CoreLogic predicts an annual increase of 6.3% from April 2014 to April 2015, as the sector sees more normal gains in home prices. CoreLogic said, "The weakness in home sales that began a few months ago is clearly signaling a slowdown in price appreciation. The 10.5% increase in April, compared to a year earlier, was the slowest rate of appreciation in 14 months."

Technically, the longer-term uptrend does remain in place but in the short-term and with so much headline risk events coming clients should consider locking if they are closing in the next days or weeks.

Joe Shamie NMLS # 241432

First Choice Loan Services NMLS # 210764

First Choice Bank NMLS# 177877

866-970-3400 x-5135

jshamie@fcbmtg.com