The Week Ahead: Treasury Auctions, Case Shiller HPI, Consumer Confidence

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With one week to go in 2009 the S&P 500 is up 24.7% on the year. Or, if it makes you feel better, the benchmark index is up 64.8% since its nadir on March 9. Between the Christmas holiday and the New Year the economic schedule is pretty empty but there are some highlights in the four-day week, which would lead one to assume that markets should inch forward amid light trading.

On Tuesday the nation’s key measure of home prices is expected to show a sixth month of price gains. Tuesday also has the Conference Board’s final measure of consumer confidence for the decade, which is set to begin rising after months of stagnation.

A final regional manufacturing report from Chicago hits the headlines on Wednesday. And on Thursday jobless claims are expected to continue moderating.

Aside from data, bond markets should be active as the Treasury is holding auctions on Monday, Tuesday, and Wednesday. 

Monday:

  • Treasury Auctions:
  • 11:30 ― 3-Month Bills
  • 11:30 ― 6-Month Bills
  • 1:00 ― 2-Year Notes

Tuesday:

9:00 ― Economists anticipate that home prices rose for the sixth straight month in October, as recorded by the S&P Case-Shiller Home Price Index. The half-year rise follows a thirty-three month decline following the bursting of the housing bubble that caused the financial crisis. 

“Demand for homes is strengthening and inventories are shrinking,” said forecasters at BBVA. “Low, stable home prices, favorable mortgage rates, increasing affordability levels and the tax credit for home buyers will continue to support demand and prices.”

10:00 ― Thanks in part to the holidays Consumer Confidence is expected to to move up 3.5 points to 53.0 in December, as recorded by the Conference Board. But don’t get too optimistic, as even with that gain the consumer outlook is still one point below the score in August. 

“Rising incomes, diminishing job losses, a continuing stock market rally, and widespread price discounting are bringing some holiday cheer to consumers,” said economists at IHS Global Insight. “Although recent winter storms and cold weather could hurt some chain store retailers this December – there should be some offsetting sales increases through the direct online channels - the recovery in consumer spending should continue.” 

“The worst of the recession appears to be over for the consumer,” added analysts at BBVA. “While the trend in consumer confidence has remained flat over the past seven months, reflecting households’ uncertainty about the path of recovery, confidence should begin to rise in the next several months, albeit at a slow pace.” 

The Conference Board index follows the Reuters/University of Michigan consumer sentiment report from last week, which jumped 5.1 points to end the year at 72.5.

  • Treasury Auctions:
  • 11:30 ― 4-Week Bills
  • 1:00 ― 5-Year Notes

Wednesday:

9:45 ― The last and most influential of the regional manufacturing indexes, the Chicago Business Barometer, is expected to moderate slightly as the year comes to a close. The Chicago PMI rose about 2 points last month to 56.1, with new orders inching up to a robust 62.8. In December trends are about the same but analysts are looking for some pullback after the November results were stronger than expected. 

“The index rose by 10 points over the last two months and looks set for a partial retreat,” said analysts from Nomura Global Economics. “Other regional manufacturing indexes released earlier in the month were mixed, and therefore offer little guidance on the outlook for the Chicago [index].

  • Treasury Auctions:
  • 1:00 ― 7-Year Notes

Thursday:

8:30 ― Jobless Claims fell sharply in the week ending Dec. 19 to 452k, a 15-month low. Week-to-week data has been volatile but the four-week average has been steadily moving lower for several months. As the year comes to an end the weekly report still isn’t indicative of job growth, but it’s close. Economists say fewer than 400k weekly claims is historically indicative of job growth, and for this report the consensus is to see 463k claims.

“While claims have been declining steadily since the beginning of 2H09, they remain well above the levels of December 2007, which is when the recession officially began,” note economists from BBVA, who said some decline would be consistent with “a gradual recovery in labor markets.”

Friday:

Markets closed. Enjoy the new decade...