The Day Ahead: Home Prices, Consumer Confidence, Treasury Auction

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Yesterday was pretty much an extension of the 3.5 day Easter holiday weekend. Volume was about as low as we can remember seeing it recently and trading ranges about as narrow. Although today doesn't hold any of the week's major headline events, it's a step in the right direction with home price data at 9AM, Consumer Confidence at 10am and the 2yr note auction at 1pm.

Amidst a backdrop of limited overnight trading activity, the benchmark 10-year note is currently UNCH at 102-05 yielding 3.365%. 10s have held to a tight 4bp range between 3.36 and 3.40% over the last three holiday slowed sessions. Ahead of $35 billion 2s at 1pm the 2s/10s curve is also UNCH at 272bps wide.

Mortgages are opening slightly weaker in price and wider in yield spread vs. 5pm marks. The FNCL 4.5 MBS coupon is -1/32 at 102-09 and the secondary market current coupon is .005% higher at 4.108%.  if these indications hold loan pricing should be unchanged or slightly better as lenders left about 12bps on the table yesterday afternoon after MBS prices rose 4/32 from morning levels.

In related markets S&P futures are +5.25 (0.41%) at 1336. Light crude is -0.17% at 112.09. Gold is -0.34% at 1503.90.

KEY EVENTS IN THE DAY AHEAD

9:00 ― The S&P Case-Shiller Home Price Index is expected to show prices were 4% lower than the same period one year ago. The index measures home prices in 20 key metropolitan areas across the country. It’s the most respected measure of prices available.

10:00 ― Consumer Confidence is anticipated to tick up to 65.0 in April from 63.4 last month. The index fell in the prior two months as oil prices soar and consumers fret about the war in Libya and the tsunami in Japan. The modest climb expected this month compares with an 8.6 point drop in the prior month.

“Even though gasoline prices have moved higher still in April, other indicators of sentiment have improved, probably driven by a strengthening labor market,” said economists at IHS Global Insight.

One key reason for the expected improvement in the preliminary survey from the University of Michigan: it beat forecasts by rising to 69.6 in early April, from 67.5.

1:00 ― Treasury auctions $35,000,000 2-year notes