Morning stuff

The Dec 20 city S&P/Case-Shiller home price index fell 3.08% y/o/y, about in line with expectations and fell .24% m/o/m NSA. Seasonally adjusting the m/o/m figure results in a rise of .32%. Of the 20 cities, 7 saw gains on a y/o/y basis, led by San Francisco, Dallas and San Diego. The y/o/y decline was led by Las Vegas which is down 20.6%, followed by Tampa, Detroit, Miami and Phoenix. Overall, the index fell to the lowest since July ’09. It is 4.8% above the low back in April ’09 but is down 29.4% from its record back in July ’06. The slowdown in the foreclosure rate (now about 1/3 of sales down from a high of 1/2), the home buying tax credit, and the artificial suppression of mortgage rates have all helped to cushion the decline in prices but when much of this wears off this summer, the market will be put to another test.

At 4am, the release of Germany’s slightly weaker than expected business confidence figure, the IFO, reversed all major markets as stocks fell, the US$ rallied, commodities dropped and sovereign bonds rose. The Feb IFO was 95.2 vs expectations of 96.1 and down from 95.8 in Jan. The components though were mixed as the Current Assessment fell as some blamed the winter weather but Expectations were above forecasts and rose to the highest since July ’07. The head of the Public Debt Management Agency in Greece squelched expectations that they would come to market this week to sell 10 yr notes but due to their upcoming refinancing needs it’s coming soon. While the Dec S&P/Case-Shiller HPI is a focus today, the key data point to watch for are the answers to the labor market questions in today’s Feb Consumer Confidence report.

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