It’s the final day of the first half of the year and markets look poised to climb. The US$ index is slightly lower, equity futures are pointing to an extension of Monday’s gains, and oil prices are inching closer to $72 per barrel (in Asian markets WTI broke $73 per barrel on news that a refinery had been attacked in Nigeria.)
The day brings three major macro releases to markets, beginning with house prices at 9am (expected to post a record decline), followed by a regional output report from the Midwest (contraction expected to slow), and topped off with a monthly look at consumer confidence (anticipated to edge up a bit.)
Traders will also have their minds on data coming out later in the week, particularly the ISM Manufacturing report on Wednesday and the June employment figures on Thursday.
Key Releases Today:
9:00 ― In the S&P Case Schiller Home Price Index for March, the press release stated there was “no evidence that a recovery in home prices has begun.” This month the news is expected to be slightly worse: the consensus looks for a record annual decline of 19.1%, compared with -18.7% last month.
Prices have fallen 32% since the housing bubble burst, and economists still look for median prices to deflate 10% - 15% over the next year.
“House prices are now low relative to household income, so a bottom is likely within reach,” said analysts from BMO Capital Markets. “But until prices stabilize, the risks to the housing market and the economy will remain on the downside.”
9:45 ― The ISM Chicago Business Barometer is the final regional manufacturing report to be released each month, ahead of the nationwide study to be posted Wednesday.
The Chicago index came in with a weak 34.9 reading in May, with new orders dropping 5 points to 37.3, but analysts are optimistic this month: the consensus looks for a 40.0 score.
That’s still a far cry from the 50-threshold indicating growth, but it gives hope that recovery could well be on its way in the final quarter. Any surprises in the report could have an impact if there’s reason to believe the nationwide ISM, to be released tomorrow, will follow suit.
10:00 ― The Conference Board’s measure of Consumer Confidence saw a massive jump to 54.9 from 40.8 in May. Analysts look for the upward trend to continue this month with a 57.0 print, though many expect oil prices could put a damper on optimism.
The expectations component has been leading the way recently, rising more than 40 points in the past two months.
Economist Ian Shepherdson from HFE said the index should “at worst, be close to the May reading.”
He added: “At the bottom of the cycle that Conference Board’s index tends to drop much further than other surveys, and so it has proved this time. the rebound in April and May has therefore just recovered lost ground relative to other indexes. It has not established a new pathway to a robust recovery in consumption.”
Three officials from the Federal Reserve also speak today, though only the first takes place between the opening and closing bells:
12:00 ― Jim Bullard, president of the St. Louis Fed, speaks on “exit strategies” from Philadelphia; a Q&A is expected.
21:00 ― Janet Yellen, president of the San Francisco Fed, speaks on the economy from California.
22:00 ― Thomas Hoenig, president of the Kansas City Fed, speaks on the economic crisis to NYU’s Stern School of Business.