[ForexNews]

The S&P Case-Shiller 20-city home price index fell by a less-than-expected 18.1% y/y in April. This is a notable improvement from the 18.7% y/y drop over the prior two months and the slowest pace of decline since October. The rate of decline decelerated even more dramatically on a m/m basis, with the seasonally adjusted index down 0.9% m/m, less than the 2.2% March decline and the smallest drop since August 2007. The 20-city composite is now down 32% from the peak in the summer of 2005 and has returned to mid-2003 levels.

All 20 metro areas surveyed witnessed a y/y decline in home prices, but 13 saw a deceleration in the rate of decline relative to March. Most notably, home prices fell at a slowing pace in San Francisco, Los Angeles and San Diego, a trend that has been in place since November for the latter two cities. Also on an encouraging note, the seasonally adjusted home price index increased on a m/m basis in Cleveland, Dallas, Denver and Washington, DC.

While we caution against reading too much into one month of data, this was a decidedly positive report. Market continues to look for home prices to fall further, likely through the second half of next year, but for the rate of decline to continue to slow.

[ForexNews]

The Conference Board's index of consumer confidence fell to 49.3 in June from 55.3 in May, below market consensus (55.3) expectations. The weakness in this report was broad-based, with both the expectations and the present situation components falling to 65.5 and 24.8, respectively. Furthermore, the labor differential (jobs plentiful - jobs hard to get) weakened to -40.3 from -38.1, signaling consumers grew more pessimistic about the state of the labor market in June. Buying plans for homes, autos, and major appliances all fell slightly despite deep price discounts. Nevertheless, the current level of the index is still sharply higher than the recent cyclical low of 25.3 in February. We expect the index to see more sustainable increases in the second half of 2009, along with the general improvement in the economy.

[ForexNews]

The Chicago Purchasing Managers Index (PMI) jumped to 39.9 in June from 34.9 in May, slightly above market consensus expectations (39.0). Each of the component indices improved: the forward-looking new orders index rose to 41.6 from 37.3, production edged higher to 39.3 from 38.1, order backlog jumped to 37.6 from 26.3, and the employment index bounced to 28.9 from its cycle low of 25.0. While the headline index improved substantially in June, it remained slightly below April's level, as did many of the components. The automaker bankruptcies are likely still having a significant drag on regional production, which should reverse in the coming months as government incentives stimulate demand and production picks up again.