Treasuries are modestly weaker across the curve in early morning trading while equities too look for a softer open. 

"Worries over Greece's fate and China's property sector as well as its banks' profitability  are all contributing to a more risk averse mood in financial markets this morning," wrote economists at BMO Capital Markets.

They cited a Standard & Poor's warning that "the profitability of Chinese banks could slip in the remainder of 2011 and drop further in the next two years, despite the strong rebound in 2010 and no signs of slippage in the first quarter of this year."

The benchmark 10-year yield was at 3.128% at 8am eastern time, up from 3.116% at Tuesday's close. The two-year yield is flat at 0.54%, and the 30-year bond yield 1.5 basis points higher at 4.264. Mortgages are opening slightly weaker as well. The FNCL 4.0 is -1/32 at 100-08 and the FNCL 4.5 is -1/32 at 103-16.

S&P 500 futures are down 2.50 points at 1,311 and Dow futures are 13 points lower at 12,308. The S&P has sold off the past three consecutive sessions.

Light crude oil prices are 0.51% lower at $99.08 while gold prices are up 0.22% to $1,526.70.

According to the Mortgage Bankers Association this morning, mortgage applications increased 1.1% in the week ending May 20, versus a four-week average of +5.2%.

Refinancings, which accounted for 66.8% of all applications in the period, gained 0.9% in the week to its highest level since early December, while purchases  posted a 1.5% gain. Purchases are now up 3.1% than the same week one year ago.

The average rate for 30-year fixed-rate mortgage was 4.69% in the week, up from 4.60% previously. 

Key Events Today:

8:30 - New Orders for Durable Goods jumped 4.1% in March, but economists expect most of that to be erased in April due to weak orders from Boeing. The median estimate is -3%, with some economists predicting a decline as big as 5.7%. According to forecasters at IHS Global Insight, orders excluding planes and turbines should climb "a token 0.2%, after a solid 3.9% gain" the month before.

"Durable goods orders likely plummeted on weak transportation and a seasonal quirk that depresses the first month of each quarter," said economists at Citigroup. "We think the underlying path of orders still is rising [but] special factors likely caused a dramatic retreat in durable goods orders in April after the strong March report."

Citi noted aircraft orders fell sharply and auto orders could be lower due to supply disruptions in Japan.

"In addition to the transportation weakness we have observed an inter-quarterly seasonal pattern in which core capital goods show initial weakness and subsequent rebound," they added. "There has been an outright decline in core capital goods orders in the first month of the past 11 quarters, despite having a positive trend since the end of the recession."

10:00 - The House Subcommittee on Capital Markets and Government Sponsored Enterprises will hold a hearing entitled “Legislative Proposals to Determine the Future Role of FHA, RHS and GNMA in the Single-and Multi-Family Mortgage Markets”

1:00 - Narayana Kocherlakota, president of the Minneapolis Fed, speaks to the Chamber of Commerce in Rochester, Minnesota.

2:00 - The House Subcommittee on Capital Markets and Government Sponsored Enterprises will hold a hearing entitled “Transparency, Transition and Taxpayer Protection: More Steps to End the GSE Bailout”

Treasury Auctions:
1:00 - 5-Year Notes