The Day Ahead: FHFA HPI, Geithner on FinReg, FedSpeak

Treasuries experienced a broad rally yesterday including the benchmark 10-year note shedding 13 basis points to 2.58% while 2-year yields created a fresh record low by dipping below the 0.428% mark.

Interest rates are extending their post-FOMC improvements while equity futures look to open lower this morning.

Just over one hour before the opening bell, S&P 500 futures are 0.75 lower at 1,134.00. The 2-year Treasury note is about unchanged at a yield of 0.424%. The 10-year Treasury note is 11/32 higher in price and 3.9bps lower in yield at 2.537%. The November FNCL 4.0 is bid 6/32 higher to a price of 102-29. 

Following the FOMC statement yesterday ― in which the the Fed predicted the recovery would be “modest” and inflation would remain “subdued” (below their target)― gold prices peaked above a nominal record of $1,290 per ounce. Gold prices are currently up 0.49% to $1,292.20 while the light crude oil is +0.89% at $75.64 per barrel.

At 7:00, the Mortgage Bankers Association reported that its weekly applications index fell 1.4% (seasonally-adjusted) as refinancings edged back 0.9% ― marking the third straight fall ―while purchases decreased 3.3%.
 
The decline in both categories occurred despite the average contract interest rate for 30-year fixed-rate mortgage declining three basis points to 4.44%.

“While purchase activity is almost 9% above July’s low, it remains a hefty 38% below year-ago levels amid very sluggish sales activity,” said economists at BMO Capital Markets. “Refinancing, however, is up more than 50% y/y thanks to lower mortgage rates.”

Prior to the release, economists at Nomura Global Economics noted that home sales have been “distressingly low” recently.  “Meanwhile, the index of refinancing applications seemed to be losing some momentum recently as the index registered its first back-to-back declines since April.”

Here is a shot of one of AQ's Reuters screens:

Key Events Today:

10:00 ― The FHFA House Price Index is expected to report that year-over-year prices fell 1.9% in July, versus a 1.7% decline in June. The index could have some influence given that the housing market is in the spotlight this week, but it tends to take a second seat to the broader study of prices in the S&P Case-Shiller Index, which has yet to be published.

2:00 ― Treasury Secretary Tim Geithner is scheduled to speak before the House Financial Services Committee’s hearing on financial regulation.

10:40 ― Charles Evans, president of the Chicago Fed, speaks at the International Banking Conference in Chicago.