The Day Ahead: Home Prices, Confidence, And Heavy Fed Speak Calendar


While Tuesday’s calendar of events is by no means the most robust of the week, it marks a noticeable acceleration from that of Monday, especially in terms of FOMC speakers (we see SIX)!  The only moderately interesting economic data is further bolstered by the week’s first round of Fed “Twist” buying ( in 2036-2042 maturities) as well as the first of the week’s Treasury Note Auctions, even if it’s merely the insignificant 2yr flavor.  

Case Shiller Home Prices lead off at 9:00 AM and are seen 0.6% lower (not seasonally adjusted) and 0.2% lower (seasonally adjusted) for the 20 metropolitan area reading.  Last month the pace of depreciation was a faster -1.1% and -0.5% respectively.  Here’s a chart of the 20 city index, with the year 2000 set to and index value of 100:

The only other major piece of economic data for the morning arrives an hour later in the form of March Consumer Confidence, expected to have moderated to 70.3 from February’s 70.8.  A break of the multi-year high of 72.0, set last February, could strike some sort of psychological chord with markets, but even then, there are bigger fish to fry later in the week.

For a bit of context, we’ll stick to a chart of 10yr Treasuries, despite the venue (yes, it’s MBS Commentary, but 10yr yields are several million times more meaningful in considering the broader trends at stake, and even in calmer markets are always a prerequisite to a discussion of MBS technicals).  Here’s where we (and apparently everyone else for that matter) view the most likely “range” at the moment:

Note that the range draws on information from pivots seen during the last quarter of 2011, especially the October highs.  Also note the recent break above the 200-Day moving average.  We haven’t yet confirmed a decisive break back below…  This fact becomes potentially disturbing if history repeats itself with respect to the rise of Treasury yields after the initial mortgage melt-down crash (something to which, incidentally, we’ve already compared the 2011 drop in yields).

 In that sense, the “scary similarities” mentioned below really begin with the similar shapes of the massive flights-to-quality at the end of 2008 and mid 2011.  The lead ups to those downward spikes were strikingly similar as well.  And now we have yields making a similar move above the 200-day Moving Average…  What does it all mean?!  Probably nothing, but it’s still scary to consider a quick romp 80bps higher from here.  

Here’s the rest of today’s busy calendar:

1000 AM – RICHMOND FED MANUFACTURING – relative non-event

1000 AM – FED SPEAK: DUDLEY – Voter/Dove/NY Fed Pres.  These are a few of our favorite things…

1015 AM – FED TWIST BUYING (’36-’42) – Completes at 1100 AM

1235 PM – FED SPEAK: ROSENGREN  – Non-voter, but supporter of Fed MBS buying.  


On a side-note: anyone else find it hilarious that “everyone” seemed to credit Ben’s absence of QE3 mention 2 weeks ago as THE main catalyst for the sell-off, yet markets were flat yesterday–a day that began with Bernanke saying ” further significant improvements in the unemployment rate will likely require a more-rapid expansion of production and demand from consumers and businesses, a process that can be supported by continued accommodative policies.”  Even if not a blatant hint at possible QE3, taken in conjunction with recent speeches, he’s not exactly convincing me that it’s “off the table,” a fact that should have sent bond yields plummeting this morning IF “everyone” was right about the sell-off causality.  They obviously weren’t, so here we are…  moving on.

0100 PM – 2YR NOTE AUCTION – No one cares anymore…

0120 PM – FED SPEAK: FISHER – Non-voter and king hawk of the hawk people.  

side note: Since Bernanke is speaking earlier in the day, you can be sure Fisher will ignore it and represent contrary points of view, just like last week!  

0345 PM – FED SPEAK: DUKE – Voter, but not for long (term expired Jan 31st and Senate voting on replacements in a few days)

0900 PM – FED SPEAK: BULLARD – late enough in the day that this is really “overnight” news for the following day


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