Rates ended last week slightly higher than where they began.  Of course the big news last week was the Fed meeting, where as expected the Fed chose to leave rates unchanged.  This week's economic calendar has important news scheduled for release every day.  With the most important report scheduled for Friday.  So will rates continue to creep higher this week, or will they began to move lower?

As expected, the major news last week centered around the Fed's action - or non-action.  However, reading through the Fed's statement released just minutes after their meeting was concluded, the Fed has seemed to indicate that a rate cut was now more likely than a rate hike. However, the Fed also indicated that inflation is still a concern and before they would consider a rate cut inflation would need to be in check. 

There are many indicators of inflation the Fed can rely upon, however the Fed's favorite measure of inflation is  the Core Personal Consumption Expenditure Index (PCE) and many analysts believe the PCE Index needs to dips below 2% for a few consecutive months before the Fed will be comfortable that inflation is in check.  It just so happens that the PCE report is due out this Friday, which will should ensure an interesting end to the week.

On the world news front, as tempers heat up between Iran and Great Brittan over the kidnapped British sailors, expect the crude oil market to be jittery, as Iran is in the top 4 oil producing countries and any indication that the flow of oil will be interrupted, may cause investors to seek the shelter of bonds, which may help push rates lower again.

The bottom line: World events may help rates improve, but any indication inflation is still thriving will push rates higher, expect a volatile week.