The Day Ahead: S&P Case Shiller, Consumer Confidence

By: •

European bourses are offering little direction this morning while traders wait another day for the next meeting of European officials. Treasuries are backing up a few basis points, but equity futures are down too; only commodity prices are climbing as markets await the latest home price data.

The 10-year and 30-year Treasury yields are each three basis points higher at 2.27% and 3.30%, while the two-year note is steady at 0.29%.

S&P 500 futures are 2.3 points lower at 1,244.10 and Dow futures are 20 points lower at 11,805.

Light crude oil jumped 2.72% overnight to $93.74 per barrel, while gold prices rose 0.64% to $1,663 per ounce.

Key Events Today:

9:00 - The S&P Case-Shiller Home Price Index last showed that house prices in 20 metropolitan areas were 4.1% lower than 12 months ago. Nine of the metro areas saw prices rise in July; the rest were down, but overall the the index has been flat for the past four months. Economists expect another flat month in August, which would bring the year-over-year index to -3.6%.

"Lower mortgage rates starting in August have provided support to housing prices despite the ongoing supply/demand imbalance that's been present for several years now," said Janney Capital Markets. "In fact, for a generic 30-year mortgage, the decline in average Fannie Mae rates from 4.28% in July to 3.79% in August translates into a 5.8% lower monthly payment, effectively making residential real estate more affordable by a similar margin."

Janney said price declines should be limited as a result.

10:00 - With stock markets on a tear since Oct. 3, economists expect Consumer Confidence will move upward this month, albeit modestly. The median estimate is 46.0, up from 45.4 a month before and 45.2 in August when the debt ceiling debacle and fears of a double-dip recession strangled sentiment.

"Hard data on the US economy continues to improve, but consumer confidence has been slow to react," said Nomura Global Economics. "We think household conditions were not quite as bad in October, despite lingering weakness in earlier released sentiment measures."

 

  • Treasury Auctions:
  • 10:00 - 4-Week Bills
  • 1:00 - 2-Year Notes