That's about the only positive statement one could make about the Case Shiller Home Price Index out this AM.  The broadest portion of the index, the 20 city home price index fell 18.6%.  Though this is slightly better than last month's record 20% decline, but still--and we'll use the technical term here--really really bad.  The fact that this is slightly "less bad" than January will cause speculation about a "turn around" in home prices.  Whether a trend of loss deceleration is forming now or not, there is certainly a long way left to go. 

In other news, Consumer Confidence shot up to 39.2 from March's revised reading of 26.9.  The expectation was for the index to stay under 30.0 this month.  The "expectations index" component (short term outlook) accounted for most of the improvemen, rising to 49.5 from 30.2.  The report sent stocks much higher, helping the Dow to get back to break-even levels on the day, which treasuries continued selling from this AM.  Both have since paused, but their impending direction is still uncertain.

After opening significantly better, treasuries in fact, have completely reversed course.  The 10 year yield has backed up almost 7 basis points in the last hour.  As can be noted in the chart below, the yield spike coincides with stocks recovering from their lows.

And as some of your colleagues point at the TV and lament the increasing treasury yields, you can tell them that MBS continue to operate in a world of their own, shrugging off a majority of the more severe price movements of their benchmark counterparts.  MBS initially followed treasuries lower--both sectors likely experiencing a significant profit-taking opportunity as new highs were reached--but have since decided to hold their ground.  The chart tells the story:

Keep in mind though, there is only so much Stock Strength and Treasury Weakness that MBS can shrug off before they must comply.  The 5yr auction coming up this afternoon should contribute significantly to the rest of the days directionality.  Even if we hold these modest gains, it would still be great news for our long term technical outlook discussed last night, not to mention that spreads are tightening dramatically on Tsy Selling these days.  Stay tuned...  It feels like it might be a "busy" day.  AQ will be up next with more detail on Case Shiller among other awesome things.