Last week we noted the possibility that the current week could see a mostly sideways grind into the more pressing events beginning Friday and that the grind could be slightly skewed positively or negatively. As it turns out, we've been treated to the positively skewed version of that reality as MBS and Treasuries continue to improve marginally despite no meaningful break into better territory than Friday's best levels. As expected, economic data has fallen on deaf ears thus far, but to an even greater extent than we'd guessed. Case in point, this morning's Consumer Confidence was far enough away from the consensus that it was fair to expect some market-based reaction, but the lack of bond-market response can be explained away fairly simply. Apart from already trading near the best recent levels, we're also looking at a situation where economic data would have to DISPROVE THE NEED for additional Fed easing by coming in stronger than expected. In that sense, a weaker-than-expected Consumer Confidence report can only really edify that which is already known and has already been traded. In other words, it didn't change the QE3 outlook.
MBS Pricing Snapshot
Pricing shown below is delayed, please note the timestamp at the bottom. Real time pricing
is available via MBS Live.
Pricing as of 11:05 AM EST
Morning Reprice Alerts and Updates
Below is a recap of instant Reprice Alerts
and updates issued via email and text alert to MBS Live subscribers
ECON: Consumer Confidence Much Lower Than Expected
- Headline Confidence 60.6 vs 66.0 forecast, 65.4 previous
- "Present Situation" 45.8 vs 45.9 previously
- "Expectations" 70.5 vs 78.4 Previously
The Conference Board Consumer Confidence Index®, which had improved in July, declined in August. The Index now stands at 60.6 (1985=100), down from 65.4 in July. The Expectations Index decreased to 70.5 from 78.4. The Present Situation Index, however, was virtually unchanged, at 45.8 versus 45.9 a month ago.
The monthly Consumer Confidence Survey®, based on a probability-design random sample, is conducted for The Conference Board by Nielsen, a leading global provider of information and analytics around what consumers buy and watch. The cutoff date for the preliminary results was August 16.
Says Lynn Franco, Director of Economic Indicators at The Conference Board: "The Consumer Confidence Index is now at its lowest level since late last year (Nov. 2011, 55.2). A more pessimistic outlook was the primary reason for this month's decline in confidence. Consumers were more apprehensive about business and employment prospects, but more optimistic about their financial prospects despite rising inflation expectations. Consumers' assessment of current conditions was virtually unchanged, suggesting no significant pickup or deterioration in the pace of growth."
Home Prices Rose in the Second Quarter of 2012 - S&P/Case-Shiller
Data through June 2012, released today by S&P Dow Jones Indices for its S&P/Case-Shiller Home Price Indices, the leading measure of U.S. home prices, showed that all three headline composites ended the second quarter of 2012 with positive annual growth rates for the first time since the summer of 2010. The national composite was up 1.2% in the second quarter of 2012 versus the second quarter
of 2011, and was up 6.9% versus the first quarter of 2012. The 10- and 20-City Composites posted respective
annual returns of +0.1% and +0.5% in June 2012. Month-over-month, average home prices in the 10-City
Composite were up 2.2% and in the 20-City Composite were up 2.3% versus May. For the second consecutive
month, all 20 cities and both Composites recorded positive monthly gains. Eighteen of the 20 MSAs and both
Composites posted better annual returns in June as compared to May 2012 – only Charlotte and Dallas saw a
deceleration in their annual rates.
Bond Markets Open Slightly Stronger After Quiet Overnight Session
MBS are a few ticks improved so far this morning after opening just slightly higher than yesterday's close. The first few hours of the Asian session saw brief, but negligible weakness in Treasuries. Volatility picked up into the European session with the most notable data out of Germany showing Consumer Sentiment unchanged as expected.
Volume was light and a good portion of 10yr futures volume continues to be overstated due to the calendar roll trading discussed yesterday. 10yr yields traded in a range from the 1.63's to 1.65's overnight and are currently at 1.647 while Fannie 3.0s are up 3 ticks at 103-12.
The first data on tap is Case Shiller Home Prices at 9am with the Consumer Confidence report at 10am generally seen as having a better chance to motivate market movement.
Live Chat Featured Comments
Matthew Graham : "RTRS- FISHER-ECONOMIC DATA SINCE LAST FED MEETING MIXED, KEY DATA STILL TO COME BEFORE SEPTEMBER'S MEETING "
Matthew Graham : "RTRS- FISHER-EASY MONETARY POLICY 'LULLS THE GOVERNMENT TO SLEEP'; FISCAL CLARITY IS WHAT IS NEEDED TO BOOST JOBS "
Matthew Graham : "RTRS- INTERVIEW - FED'S FISHER SAYS NO DECISION YET ON FURTHER MONETARY POLICY EASING "
Matthew Graham : "RTRS- CONFERENCE BOARD CONSUMER CONFIDENCE INDEX AND EXPECTATIONS INDEX AT LOWEST SINCE NOVEMBER 2011 "
Matthew Graham : "RTRS - US CONSUMER EXPECTATIONS INDEX 70.5 IN AUGUST VS JULY REVISED 78.4 (PREVIOUS 79.1) - CONFERENCE BOARD "
Matthew Graham : "RTRS- US CONSUMER PRESENT SITUATION INDEX IN AUGUST 45.8 VS JULY REVISED 45.9 (PREVIOUS 46.2) "
Matthew Graham : "RTRS- US AUGUST CONSUMER CONFIDENCE INDEX 60.6 (CONSENSUS 66.0) VS JULY REVISED 65.4 (PREVIOUS 65.9) - CONFERENCE BOARD"
Ted Rood : "Gotta love that letter I got yesterday from Met (ex employer) stating they gave Justice Dept my name (and names of all other employees) for investigation of FHA loans originated there."
MMNJ : "not as of yet"
Ira Selwin : "Anyone here have any issues with the FHA connection showing incorrect MIP factors for streamline refinances? "
Matthew Graham : "RTRS- SEC SAYS ISSUED FORMAL ORDER OF INVESTIGATION FEBRUARY 22, 2012 TO PROBE POSSIBLE FRAUD IN OFFER AND SALE OF MORTGAGE-BACKED SECURITIES BY RESCAP "
Matthew Graham : "RTRS- SEC INVESTIGATING ALLY MORTGAGE UNIT RESIDENTIAL CAPITAL'S ORIGINATION AND UNDERWRITING PRACTICES - COURT DOCUMENTS "
Jeff Anderson : "Again, these are IOU's. There as good as money."
Victor Burek : "only with conditions"
Jeff Anderson : "Forgot D. You don't think Merkel would loan him a few bucks?"
Victor Burek : "or D) to broke to fly to jackson hole"
Jeff Anderson : "GM, all. So what's Draghi's reason for skipping Jackson Hole. A) Has no plan and doesn't want to take the heat B) Doesn't want to steal Big Ben's stage c) Is actually working on a legitimate plan that may work?"
Matthew Graham : "I think that about sums it up for me too. It's "nice." Not definitive, but I'm hopeful it can continue."
Matthew Graham : "skeptical that house prices have bottomed"
Victor Burek : "i'm optimistic that a bottom is in"
Matt Hodges : "not skeptical of the reporting"
Matthew Graham : "so that's a "skeptical" vote then?"
Matt Hodges : "+10% would matter"
Matt Hodges : "irrelevant - the numbers are too low to matter on +.5 vs. -.1"
Matthew Graham : "First year-over-year increase in almost 2 years. Optimistic or skeptical?"
Matthew Graham : "RTRS- US JUNE 20-METRO AREA HOME PRICES +0.5 PCT (CONSENSUS -0.1 PCT) FROM YEAR AGO -- CASE-SHILLER "
Matthew Graham : "RTRS- US JUNE HOME PRICES IN 10 METRO AREAS +1.0 PCT SEASONALLY ADJUSTED VS REVISED +1.0 PCT IN MAY- CASE-SHILLER "
Matthew Graham : "RTRS- US JUNE 20-METRO AREA HOME PRICES +2.3 PCT NON-ADJUSTED (CONSENSUS +1.6) VS REVISED +2.3 PCT IN MAY-S&P/CASE-SHILLER"
Matthew Graham : "RTRS- US JUNE HOME PRICES IN 20 METRO AREAS +0.9 PCT SEASONALLY ADJ (CONSENSUS +0.5) VS REVISED +1.0 PCT IN MAY - S&P/CASE-SHILLER "