Economists are forecasting annualized core CPI to rise 2.4% following March's annualized rise of 2.4%. The monthly core CPI is expected to rise 0.2% following March's similar rise.

The annualized headline CPI is expected to remain steady at an increase of 4.0%. The monthly data is also expected to remain steady, rising 0.3% following a 0.3% increase in March.

Jack Bauer, fixed income strategist from Manning and Napier, said the inflation data won't have a big impact on Fed interest rates. He said markets are expecting the Fed to hold rates at the June meeting.

"Unless we get a big deviation from the expectations, the CPI number is not going to move markets that much," he said.

George Adell, fixed income strategist from Commerce Capital Markets, said the Fed cutting rates has helped increase investor confidence and the market is now focused on inflation, adding there has been a big turnaround in future Fed moves.

"A month ago, people were thinking the Fed was going to drop rates to the 1% level. Now the thinking is, 'well now they are at 2% and as we get into the first quarter of '09, the Fed starts raises rates.'"

With oil prices hitting record highs on an almost daily basis, markets will also pay attention to DOE crude oil inventories. According to a Platts survey released Tuesday, analysts expect to see a build of 2.5 million barrels while gasoline is expected to decline by 800,000 barrels. Distillates are expected to rise by 1.1 million barrels and refinery utilization is forecasted to rise 0.8%.

All times in EDT

Wednesday

7:00 US MBA Mortgage Applications 9-May Prior: +15.6%

8:30 US Fed's Rosengren Speaks on Basel II at Boston Conference

8:30 US Consumer Price Index (Monthly) April Exp: +0.3% Prior: +0.3%

8:30 US Consumer Price Index Ex Food & Energy (Monthly) April Exp: +0.2% Prior: +0.2%

8:30 US Consumer Price Index (Annualized) April Exp: +4.0% Prior: +4.0%

8:30 US Consumer Price Index Ex Food & Energy (Annualized) April Exp: +2.4% Prior: +2.4%

8:30 US Consumer Price Index Core Index (SA) April Prior: 214.176

8:30 US Consumer Price Index (NSA) April Exp: 214.730 Prior: 213.528

9:15 US Fed's Kroszner Speaks on Basel II, Operational Risk in Boston

10:30 US DOE U.S. Crude Oil Inventories Week Ending May 9 Exp: +2500K Prior: +5654K

10:30 US DOE U.S. Gasoline Inventories Week Ending May 9 Exp: -800K Prior: +794K

10:30 US DOE U.S. Distillate Inventory Week Ending May 9 Exp: +1100K Prior: -107K

10:30 US DOE U.S. Refinery Utilization Week Ending May 9 Exp: +0.8% Prior: -0.41%

11:30 US Treasury to sell $32B in 126 Day Cash Management Bills

12:00 US Fed's Lockhart to Speak at Financial Markets Conference

21:00 CA Quebec's Charest to Address Business Leaders from Canada and Europe at an event in Ottawa.

By Neils Christensen, This email address is being protected from spam bots, you need Javascript enabled to view it , edited by Nancy Girgis, This email address is being protected from spam bots, you need Javascript enabled to view it