In spite of Eurozone leaders and the IMF reaching a 33rd hour (that's 3x an "11th hour," see?) deal on Greek debt restructuring, bond markets hit the domestic session in relatively unchanged territory. The Greece news did actually cause some selling early in the overnight session, but it was short-lived and relatively minor in scope. In the big picture, yesterday night's announcement was a mere blip versus the past two weeks of relative weakness. It may be a "blip too far" if the morning activity is any indication. Ostensibly bond-bearish factoids abound with slightly stronger-than-expected economic data as well as the looming Treasury auctions over the next three days, yet bond markets are making gains. What gives? Most likely, the positivity is a factor of the recent range, which erred on the defensive side heading into the Thanksgiving break. Seen in this light, today's improvement is more about returning to the middle of Novemeber's range, leaving the door more open to go either way from here.
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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 Hits Highest Level Since Feb 2008
- Confidence 73.7 vs 73.0 Consensus
- Last month revised from 72.2 to 73.1
- 'Present Situation' FELL to 56.6 from 56.7
- Biggest gains in 'Expectations,' up to 85.1 vs upwardly revised 84.0 in October (previously 82.9)
The Conference Board Consumer Confidence Index®, which had increased in October, posted a moderate increase in November. The Index now stands at 73.7 (1985=100), up from 73.1 in October. The Present Situation Index was virtually unchanged at 56.6 versus 56.7 last month. The Expectations Index rose to 85.1 from 84.0 last month.
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 November 13.
Says Lynn Franco, Director of Economic Indicators at The Conference Board: “The Consumer Confidence Index increased in November and is now at its highest level in more than four and a half years (76.4 Feb. 2008). This month’s moderate improvement was the result of an uptick in expectations, while consumers’ assessment of present-day conditions continues to hold steady. Over the past few months, consumers have grown increasingly more upbeat about the current and expected state of the job market, and this turnaround in sentiment is helping to boost confidence.”
Bond Markets Roughly Unchanged After Greek Deal, AM Data
As we perused headlines about Greece's debt deal last night and this morning, we were struck by the lack of attention paid to the fact that the supposed December 13th bailout payment is far from a done deal and remains contingent on the parliamentary approval by Eurozone member states. Sarcastically, The Day Ahead
this morning mentioned that "member states" = "Germany," and no sooner have domestic markets begun their trading day than we're already seeing headlines from German officials offering up reasons for delay and/or rejection of the current form of the bailout agreement.
Even if most news outlets failed to hone in on that critical issue ahead of time, markets did not. While German Bunds began their day in much higher territory, at least half of their move higher was implied by late action in US Treasuries and the other half was almost immediately unwound. Both Bunds and TSYs rallied roughly 4bps lower from 2am to 5:30am. That was essentially a push back against the "risk-on" suggestion of the debt deal and those 4 bps were as much as bond markets got before again moving slightly higher in yield.
Despite the healthy ebbs and flows, overnight yield highs held just before and after the domestic open with 10's going no higher than 1.675. MBS opened up a tick or two weaker but have generally held their ground perfectly within the high end of yesterday's range, finding support at yesterday afternoon's lows (104-26 in Fannie 3.0s). Stock futures climbed in the overnight session but are now back underneath yesterday's 4pm levels as the domestic cash open approaches.
Stateside economic data this morning has largely been a non-event. While there was a brief gyration following the better-than-expected Durable Goods report, it was mostly brief and not too much of a gyration. A few fence-sitters took note of the ground-holding and brought both Treasuries and MBS quickly back to their best levels of the morning. Case-Shiller Home Price data isn't typically much of a market mover, and came in as-expected this time anyway, leaving it almost completely off the radar for market moving guidance this morning.
Stocks and bonds have been reasonably well connected, so we'll observe that potential ongoing correlation as we await Consumer Confidence data at 10am and another round of Fed "Twist" buying at 10:15am. Fannie 3.0s are currently up 3 ticks on the day at 104-31 and 10yr yields are down just under 1 bp at 1.659
ECON: Case-Shiller Home Prices Improve In Line With Expectations
- 20 City Index +0.4 vs +0.4 Consensus and Previous
- Unadjusted +0.3 vs +0.5 Consensus
- Year over year +3.0 pct vs +2.9 pct Consensus
Data through September 2012, released today by S&P Dow Jones
Indices for its S&P/Case-Shiller1 Home Price Indices, the leading measure of U.S. home prices, showed
that home prices continued to rise in the third quarter of 2012. The national composite was up 3.6% in the
third quarter of 2012 versus the third quarter of 2011, and was up 2.2% versus the second quarter of 2012.
In September 2012, the 10- and 20-City Composites showed annual returns of +2.1% and +3.0%. Average
home prices in the 10- and 20-City Composites were each up by 0.3% in September versus August 2012.
Seventeen of the 20 MSAs and both Composites posted better annual returns in September versus August
2012; Detroit and Washington D.C. recorded a slight deceleration in their annual rates, and New York saw
ECON: Durable Goods Unchanged in October, Better Than Expected
- Headline Durable Goods 0.0 vs -0.6 Consensus
- Excluding transportation +1.5 vs -0.5 Consensus
- Ex-Defense & Aircraft +1.7, Most since May 2012,
New orders for manufactured durable goods in
October increased slightly to $216.9 billion, the U.S.
Census Bureau announced today. This increase, up five
of the last six months, followed a 9.2 percent September
increase. Excluding transportation, new orders increased
1.5 percent. Excluding defense, new orders increased
Machinery, up two consecutive months, had the largest
increase, $0.9 billion or 2.9 percent to $30.9 billion.
Live Chat Featured Comments
Darren Costa : "Seattle housing is moving pretty good, MO's not common, prices seem to be slightly higher but nothing crazy"
Kim Gustafson : "austin tx area where I also lend quite a bit being from the area, also many multiple offer situations"
Kim Gustafson : "In DFW area, TX, seeing multiple offer situations in park cities, southlake, westlake, allen and mckinney areas...inventory down"
Brent Borcherding : "Multiple offers over asking price is VERY common here, too."
Nick Solis : "california bay area. we haven't done a purchase in over 6 mos that didn't have multiple offers. we have buyers who have been offering for 6 mos over asking and not getting in. In my immediate area prices are up 75-100k y over y"
Brent Borcherding : "Due to rates dropping, all FHA purchases in my area last year are being refi'd into LPMI at 95% or less (same rate as the FHA but dropping the costly monthly payment for FHA annual). Home value are up 8-10% in Portland area."
Nick Solis : "100% of my appraisals are higher. so much in fact we are taking people out of fha loans we did for them in the last 12-18 mos into conv refi's"
Matthew Graham : "RTRS- CONFERENCE BOARD'S US CONSUMER CONFIDENCE INDEX HIGHEST SINCE FEB 2008"
Matthew Graham : "RTRS- US NOV CONSUMER CONFIDENCE INDEX 73.7 (CONSENSUS 73.0) VS OCT REVISED 73.1 (PRIOR 72.2) - CONFERENCE BOARD "
Jason Harris : "As far as purchases go....central Ohio seems to be heating up....I have seen more multiple offers that I have in years and homes are moving quickly...new builds have also really picked up"
Matt Hodges : "michael - every market is different. ours in increasing - 20 metro areas doesn't give you the full picture"
Michael Gillani : "It's funny how these reports regarding home prices are in the positive. 100% of appraisals i'm having done on the same properties that were done a year ago, are coming in less.....substantially less!"
Matthew Graham : "This is funny (and sad). The Eurozone script continues being read as written: RTRS - GERMAN OPPOSITION STEINBRUECK SAYS PARLIAMENTARY VOTE ON GREEK DEAL SHOULD BE DELAYED TILL LAWMAKERS HAVE ALL NECESSARY INFORMATION "
Matthew Graham : "RTRS- US SEPTEMBER HOME PRICES IN 20 METRO AREAS +0.4 PCT SEASONALLY ADJ (CONSENSUS +0.4) VS REVISED +0.4 IN AUGUST- S&P/CASE-SHILLER "
Matthew Graham : "A few minutes before the data: RTRS- MERKEL ALLY MEISTER SAYS GERMAN PARLIAMENT CAN'T APPROVE GREEK PACKAGE IF BELIEVES IT CONTAINS RISK OF HAIRCUT AT LATER DATE "
Matthew Graham : "RTRS - US COMMERCE-NO RESPONDENTS TO OCT DURABLES SURVEY INDICATED ANY IMMEDIATE EFFECT ON PRODUCTION AT FACTORIES IN AREAS AFFECTED BY HURRICANE SANDY"
Matthew Graham : "RTRS - U.S. OCT DURABLES EX-TRANSPORTATION +1.5 PCT (CONS -0.5 PCT) VS SEPT +1.7 PCT (PREV +2.0 PCT)"
Matthew Graham : "RTRS - US OCT DURABLES ORDERS UNCHANGED (CONSENSUS -0.6 PCT) VS SEPT +9.2 PCT (PREV +9.8 PCT)"