Agent Jirius

In my opinion one of this week's big "wildcard" events with be the Obama administration's unveiling of their next phase of the bailout plan for the auto industry on Monday.   Rates could go either way, however, long-term they will still come down lower.

If, as expected, the plan includes massive amounts of new capital injections into the auto sector, look for bond market investors to register their disapproval by pushing interest rates - including mortgage interest rates - higher.

Treasury Secretary Geithner told a network television reporter today (Sunday) that there is only about $135 billion remaining of the original $750 billion set aside for the financial rescue of corporate America. If it becomes apparent the Treasury Department will be called upon to venture into the capital market to borrow billions of dollars more -- the weight of all this debt will tend to push rates up across the board.

Another event on this week's calendar that has the potential to stir up trading activity in the mortgage market is Thursday's Financial Accounting Standards Board meeting. This regulatory body is expected to consider relaxing current mark-to-market accounting rules. The subject has generated significant lobbying efforts for and against the change. If the rule is modified substantially -- look for bank and other financial companies to ignite a major stock market rally - as these companies' capital positions improve dramatically with nothing other than the stroke of a pen. It will be a close call - stay tuned.

Without something like a major accounting rule change there is a chance the round of profit-taking that began in the stock markets on Friday will accelerate this week. If so, the flow of capital from the equity markets into the relative safety of notes, bonds and mortgage-backed securities will likely limit the amount of upward traction mortgage interest rates might otherwise generate.