Opening bell this morning may lower rates

Mortgage bond prices opened higher Monday morning adding to the small gains seen Friday afternoon. Rates are finding support from weak stock futures, an indication the DOW Jones index will open lower.

This week promises to be action packed with the Treasury set to auction 101B in 2, 5 and 7-year notes. The new supply of debt competes for available investment dollars; therefore it would not uncommon to see rates come under pressure ahead of the auction as trading desks prepare for the new issue. If the auction is well received, rates typically improve somewhat and vice verse.

The results of the 2-year auction are expected around 1:30 pm ET today. As if a credit crisis, housing slump and massive unemployment around the globe is not enough; FEAR (capitalized for emphasis) of a pandemic from the swine flu is gripping the world.

Traders are dumping airline, hotel and travel relates sharers as more is learned about the spread of the flu. Students in Universities around the globe will be studying these times for generations to come.