Mortgage bond prices opened higher Monday morning adding to the gains

Mortgage bond prices opened higher Monday morning adding to the gains seen Friday afternoon. Bonds are finding support from weak economic news released at the open.

In news released at the open, retail sales fell 0.5% in June. Excluding car purchases, retail sales fell 0.4%. That data was sharply weaker than expected. Analysts had estimated sales would rise 0.2% and ex-auto sales would be unchanged.

Traders are waiting for stocks to begin trade at 9:30 am ET.

This week is packed with important events and data, which will cause prices to swing. Tomorrow brings consumer price index (CPI), production and utilization data. Wednesday brings housing starts and the Fed Beige Book and Thursday we will see jobless claims, LEI and the Philly Fed survey. In addition 1/3 of the stocks in the Dow will release earnings reports.

The main event of the week is expected to be Federal Reserve Chairman Ben Bernanke's congressional testimony on the economic outlook on Tuesday and Wednesday. Investors will scour his remarks for any hints the Fed is leaning toward providing additional monetary stimulus.

The Euro Zone continues to struggle. In a turnaround from previous policy, the European Central Bank (ECB) advocated imposing losses on senior bondholders of debt issued by Spanish banks. This marks a contrast to the position the bank took when bailing out Irish banks in 2010 and is furthers evidence the situation in Europe is fluid.