Smart money is betting on the Fed tapering to be announced at next week’s FOMC meeting. Analysts believe the improvement in the labor market has met the Fed’s criteria to begin trimming its buybacks. I believe they are likely to be very careful tampering with MBS as long-term rates for housing have already risen from 3 5/8 % to 4 7/8% in just a few months since they first mentioned tapering. I am sure they are concerned that rising rates will be a drag on the housing recovery. Meanwhile inflation remains soft and Bernanke would like to be able to leave the Fed with a legacy of avoiding a greater economic collapse stemming from 2008 and also starting down the path to end the extraordinary intervention the Fed did. There has been no Fed speak to the contrary so next Wednesday will be a very anxious day in the market.