tuesdays ppi report and wednesdays cpi report

I'm tipping the DOW to finish positive around +10 to +25 this morning....:)))

Bonds ease ahead of Fed clues, data
Investors will search for clues about likelihood of a June interest rate hike from today's five Fed speeches.

June 12, 2006: 10:12 AM EDT


NEW YORK (CNNMoney.com) - Treasury prices eased Monday after Friday's slight gains, as investors traded lightly ahead of Fed speeches and the week's major economic reports.

The 10-year note fell 3/32 to 101-01/32, yielding 4.99 percent, up from 4.97 percent Friday. The benchmark yield was just below the yield on the two-year note, resulting in an inverted yield curve.




Yield curve inversions in the past have been considered possible signs of impending recessions, but that is considered less reliable since the curve has inverted on and off over the last 11 months.

The 30-year bond fell 5/32 to 91-27/32 to yield 5.03 percent, up from 5.02 percent in the previous session. Bond prices and yields move in opposite directions.

The five-year note fell two ticks, yielding 4.96 percent, while the two-year note fell one tick to yield 5.03 percent.

This week will see the release of important data about price inflation: Tuesday's PPI report and Wednesday's CPI report. (Full story)

Investors will follow the numerous speeches by Fed officials Monday as they seek clues about the upcoming June interest rate decision.

Cleveland's president Sandra Pianalto spoke at 9:15 am on the economy and federal policy. Dallas Fed President Richard Fisher speaks on global policy at 10:30, followed by Fed Governor Mark Olson on banking regulations at noon. Governor Susan Schmidt Bies will speak on risk management at 3 and chief Ben Bernanke will address the American Bankers Association after the close at 7:30 pm.

Pianalto repeated earlier Fed declarations that inflation was towards the high end of their comfort level, and markets showed little reaction.

In currency trading, the dollar gained against the euro and the yen.

The euro bought $1.2586, down slightly from $1.2640 Friday. The dollar traded at ¥114.23, up from ¥113.99 in the previous session.

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Desperately seeking direction
Upcoming week offers key CPI, PPI inflation reading as weary investors search for interest rate clues.

By Steve Hargreaves and Grace Wong, CNNMoney.com staff writers
June 11, 2006: 8:47 AM EDT


NEW YORK (CNNMoney.com) - Key inflation readings due this week may provide investors precious new clues about the interest rate outlook.

Tuesday will bring information from the Labor Department on how much businesses are experiencing price increases in the Producer Price Index.





But that's really just a prelude to Wednesday's Consumer Price Index, which measures the price change in certain consumer goods and services.

Both reports are expected to offer some indication of the future course of interest rates and could set the tone for the market for the next few weeks.

Investors will be especially focusing on the core CPI report, which excludes volatile food and energy prices. It has exceeded expectations the past two months.

"That will be looked at closely. That could be market moving," said Steve Goldman, market strategist at Weeden & Co.

Uncertainty surrounding the interest rate outlook has been vexing stocks, causing a heavy selloff in the U.S. and in markets around the world over the last several weeks.

The Dow sank to a four-month low last week and finished down 3.2 percent for the week. The S&P 500 fell 2.8 percent and the tech-fueled Nasdaq shed 3.8 percent last week.

"The market has been in a sour mood," said Alfred Goldman, chief market strategist at A.G. Edwards. "The general concern is that the Fed is not going to pull off a soft landing," he said.

The inflation game
Inflation has been on investors' minds as they search for clues about whether the Federal Reserve will hike rates for the 17th straight time when it meets June 28-29 and, more importantly, what it intends to do in the months ahead.

Unlike the last two years, when the Fed made it plain it would continue to raise rates at a measured pace, central bank policy-makers have now said they simply don't know what will come next and are watching the economic numbers, just like everyone else.

If this week's inflation readings exceed expectations, traders predict a bloodbath.

"Everybody's so afraid of it," said Todd Clark, director of stock trading at Nollenberger Capital Partners in San Francisco. "If the numbers show a big increase in inflation, the market's not going to like that at all."

On the plus side, Clark also said he expects a big boost if the inflation numbers come in lighter than expected.

Stock investors don't like higher interest rates because they ultimately slow the flow of money through the economy and put the brakes on corporate profit growth, thus making stocks less appealing.

Fed Chairman Ben Bernanke set off the latest round of inflation jitters when he made hawkish comments early last week, dashing hopes the Fed would pause in its campaign of interest rate hikes and raising new fears the central bank would raise rates too high and strangle economic growth.

Big money
Also on tap this week: earnings reports from several big investment banks, which have been reporting bumper earnings in recent quarters on strength in trading and underwriting.

First up is Lehman Brothers (Research), set for before the opening bell Monday, followed by Goldman Sachs (Research) on Tuesday and Bear Stearns (Research) Thursday. All three are expected shine, boosted by a surge in trading volume.

Also set to report next week are Best Buy (Research) and Adobe (Research), Carnival (Research) and World Wrestling (Research).