The Day Ahead: Home Price Index, Consumer Confidence, Retail Surveys, Fed Speakers

Stock prices are trading lower this morning after yesterday’s blistering 1.78% gain. Commodity prices are mixed with oil slightly above $66, well below a recent peak of $74, but still almost a third higher than one year ago. The US$ is a tad higher on a trade-weighted basis, while the euro remains soft. Yields on the benchmark 10-year Treasury are down four basis points to 3.28%.

The Tuesday schedule brings a variety of flavors to the market’s menu. Second-tier retail reports should give a sense of how consumption is holding up as September comes to a close; a key look at home prices is expected to indicate that the long deflationary spiral has hit a bottom; the consumer confidence report will say present conditions remain soft but expectations are rising; and two officials from the Federal Reserve assess the economic outlook.

Key Releases Today:

9:00 ― The S&P Case-Shiller Home Price Index is the most closely watched measure of national home prices. Last week the FHFA released its results and showed prices moving up 0.3% in July, but the Case-Shiller measure is more comprehensive, largely because it captures homes purchased using subprime mortgages and other alternatives.

“The first-time home-buyer tax credit certainly helped demand for homes ― and values ― but so did the calendar; home sales typically improve in late spring and early summer as families try to finish moving before school begins,” said Mark Lieberman, senior economist at Fox Business News. 

Robert Kavcic, economist at BMO, said the annual change in prices should moderate to about -14.3% y/y, up from -15.4% y/y in July and the low of -19% y/y set in January. 

9:50 ― Richard Fisher, President of the Dallas Federal Reserve, delivers an economic update to the Texas Christian University Business Network of Dallas.

10:00 ― The Conference Board’s measure of Consumer Confidence should be in line with the advance seen in last week’s sentiment measure from the University of Michigan. Last month it rose 7 points to 54.1; this month a modest gain to 57.0 is expected. A surprise could be in store due to rising unemployment, but the continued advance in stock markets ― last week’s 2.2% dip excluded ― should provide a sense of optimism.

“The action should be mostly in the expectations index, which accounts for 60% of the headline number,” said Ian Shepherdson from High Frequency Economics. “The current conditions number is depressed by the state of the labor market . . . The surge in stock prices implies a modest further increase.”

7:00 ― Well after the markets close, Charles Plosser, President of the Philadelphia Fed, will give a speech on the Fed's role in the recovery process at the Lehigh Valley Economic Outlook in Easton, Pennsylvania. 

Treasury Auctions:

1:00 ― 4-Week Bills