The trend in house prices appears to be worsening. We expect an acceleration in the decline in the Case-Shiller measure for February. Modest POMO closing at 11am will do little to offset the $35 billion in 2 Year notes to be auctioned off at 1 pm.
9:00: S&P/Case-Shiller home price index (February): Faster decline. Over the last 2-3 months, the various measures of US house prices (FHFA, Core Logic, Zillow, Radar Logic, Median Existing Home Sales Prices) have deteriorated at an accelerating rate. We expect a similar message from the Case-Shiller report this morning, with the 20-city index falling by 0.3% mom (seasonally adjusted) after a 0.2% decline in January.
Median forecast (of 20): -0.4%; last -0.2%.
10:00: Conference Board confidence index (March): Slight improvement. After last month’s sizable decline, we see room for a partial recovery in the Conference Board’s measure of consumer confidence. An ongoing improvement in labor market conditions may have offset the negative impact of further increases in gasoline prices on household sentiment. Our forecast for a rise to 65.0 would leave the index well-below its February level of 72.0.
Median forecast (of 68): 64.5; last 63.4.
10:00: Richmond Fed survey (April): Likely still high. Following the very large decline in the Philadelphia Fed’s manufacturing index, the second-tier regional surveys have taken on added importance. Last month the Richmond Fed measure declined slightly, but remained at a high level of 20.0.
Median forecast (of 8): +20; last +20.
11:00: Fed monetizes $1.5-$2.5 billion. Today Brian Sack will flood market with just a modest ~$2 billion after it buys bonds maturing betwee 05/15/2021-11/15/2027.
13:00: Treasury auctions off $35 billion in 2 Year bonds (CUSIP: YB7) . Primary Dealers buy about 55%, flip 15% back to Fed one week later.
From GS and ZH