Lenders who were already out with pricing before Consumer Confidence seem to have been aggressive enough to preclude reprices for the better. The rest of them waited for the release itself. That's not to say rates aren't significantly improved though. In fact, several rate sheets have larger improvements in rebate than the day's MBS improvements would suggest. Fannie 4.0's are up three eighths of a point at 103-29 and 3.5's up 13 ticks just over 101-01. Ginnie 3.5's are up about half a point to 102-18. There are a couple nice technical bounces out there--103-26 in Fannie 4.0's for instance or 2.182 in 10yr notes. Both these marks capped early gains, were broken leading up to Consumer Confidence, and have since held up to provide supportive bounces (i.e. charts haven't crossed back over to the weak side after crossing over to the strong side). There's a small chance of reprices for the better if 4.0's hold 103-28 or higher and 3.5's hold 101-00 or higher, but those chances improve if we can add a few more ticks to those levels.

(Reuters) - U.S. consumer confidence crumbled in August to its lowest level in more than two years as the fallout from political wrangling over a budget deal took its toll, according to a private sector report released on Tuesday. The Conference Board, an industry group, said its index of consumer attitudes sank to 44.5 from a downwardly revised 59.2 the month before. The index was well off a poll of economists by Reuters for a reading of 52.0. The index was at the lowest level since April 2009, the report said. July was originally reported as 59.5. Consumers' outlook also deteriorated sharply as the expectations index plunged to 51.9 from 74.9. The assessment of consumers' present situation fared better with the index slipping to 33.3 from 35.7. Consumers have faced many hurdles recently, including the debate surrounding the debt ceiling, the downgrade of the U.S. credit rating by Standard & Poor's, volatility in financial markets and increased fears the economy is heading for another recession. "A contributing factor may have been the debt ceiling discussions since the decline in confidence was well underway before the S&P downgrade," Lynn Franco, director of The Conference Board Consumer Research Center, said in a statement. Consumers' labor market assessment also worsened. The number of respondents saying they found "jobs hard to get" rose to 49.1 percent from 44.8 percent the month before, while the "jobs plentiful" category fell to 4.7 percent from 5.1 percent. The view on prices increases was unchanged with expectations for inflation in the coming 12 months holding steady at 5.8 percent. (Reporting by Leah Schnurr; Editing by Padraic Cassidy)

It now looks like today will be the official start of the week. We already know that Monday was the lightest volume day since late April but now we see that it's trading levels were largely irrelevant as well--looking somewhat like blip on electrocardiogram that has returned perfectly to the flat line (no pun intended) suggested by Friday's narrowing range in the afternoon. You might hear event-based explanations for this correction in bonds (even from us in the next few sentences!) but we caution you, they're largely irrelevant. Some mention has been made overnight of a weak Italian debt auction, in which the ECB had to step in to buy. Then there's the notion that stocks are bouncing off overhead technical resistance in the low 1200's, and while we agree with both of those explanations, we'd also point out that 10yr yields were back down to 2.23 before stock futures even budged and move down again from 2.22 to 2.18 between 530am and 830am this morning despite S&P futures being flat to higher. All that to say: it seems like bond markets were going where they were going without much consideration for what was going on in the realm of the global economy overnight or the domestic economy this morning. It's been a simple, straight march back to the technical levels suggested by Friday's higher volume trading. 10's are currently at 2.19, Fannie 4.0's at 103-26, 3.5's at 100-25 and Ginnie 3.5's at 102-11. Rate sheets (if you don't have them already) should be much improved this morning and unless a lender waits for Consumer Confidence at 10am, shouldn't be delayed.

(Reuters) - Chicago Federal Reserve Bank President Charles Evans said on Tuesday he favored strong central bank accommodation for a substantial period of time, as the U.S. economy looks to be moving "sideways." Evans told CNBC he favored some of the most aggressive policy actions on the table now being considered to boost the economic recovery, and said that the U.S. Federal Reserve needed to clarify its policy intentions. "It's difficult to characterize the labor market as anything other than consistent with being in a recession," said Evans, adding the economy is "really going sideways more than anything else. "I'm in favor of some of the most aggressive policy actions of anyone on the Committee," added Evans, a noted policy dove who votes on the Fed's policy-setting Federal Open Market Committee this year. Evans' comments come days after the annual Fed conference wrapped up in Jackson Hole, Wyo., where Fed Chairman Ben Bernanke said the central bank is prepared to do more to foster a stronger economy, but did not elaborate on how. The U.S. economy grew at a 1 percent annual rate in the second quarter after expanding only 0.4 percent during the first three months of the year. The Fed has held interest rates at near zero since December 2008 and earlier this month said it expected to keep rates steady for at least the next two years. "I think we would have been so much worse off if we had not had the accommodation that's been in place," Evans said. Also on Tuesday, Federal Reserve Bank of Minneapolis President Narayana Kocherlakota is set for a speech, while later in the day minutes from the Federal Open Market Committee meeting of Aug. 9 are to be released. (Reporting by Leah Schnurr and Jonathan Spicer; Editing by Padraic Cassidy and W Simon )

(Reuters) - U.S. single-family home prices dipped in June from May as the market continued to crawl along at depressed levels, a closely watched survey said on Tuesday. The S&P/Case-Shiller composite index of 20 metropolitan areas slipped 0.1 percent on a seasonally adjusted basis. A Reuters poll of economists had expected prices to be unchanged. On a non-seasonally adjusted basis, the index rose 1.1 percent. "This month's report showed mixed signals for recovery in home prices. No cities made new lows in June 2011, and the majority of cities are seeing improved annual rates," David Blitzer, chairman of the index committee at Standard & Poor's, said in a statement. Prices in the 20 cities fell 4.5 percent from a year ago, better than expectations for a decline of 4.6 percent. The national index was up 0.1 percent on a seasonally adjusted basis for the second quarter compared to the first three months of the year. An excess supply of homes, ongoing foreclosures, tight credit and weak demand have kept the housing market on the ropes and hampered the broader economic recovery. (Reporting by Leah Schnurr; Editing by Padraic Cassidy)