Highlights
Inflation readings proved quiet in an unusually watched personal income & outlays report. The PCE core deflator -- a reading closely watched by Federal Reserve policy makers who are now focusing their vigilance on inflation -- rose a moderate 0.2% in February and is up a very mild 1.6% on the year.

The PCE deflator including food & energy showed, as usual, a little more pressure, rising 0.3% in the month and up a manageable and unalarming 2.3% on the year. These readings will cool inflation worries at the Fed, and they begin to push back worries in the markets that 50-basis-point rate increases are in the works.

Personal income rose 0.3% in February against a 0.5% rise in outlays. These readings are mostly as-expected and point to solid spending and moderate income growth, probably a favorable mix given still sluggish job growth and still tame inflation.

Wages & salaries rose 0.2% in the month while the savings rate fell two tenths to 0.6%.

Bonds moved higher and the dollar dipped probably in response to the inflation readings. But the direct effect of the data on the market is clouded by a sharp rise in jobless claims, data also released at 8:30 a.m. ET this morning and also favorable to the bond market. Whatever the effect, markets will turn on data from Chicago purchasers at 10:00 a.m. ET.