At the beginning of the week, personal income and outlays figures seemed to appease market players because they revealed that consumers were cautiously optimistic. Yet, the bulk of the news (construction, NAPMs, factory orders) revealed that the economy was still fairly weak. The employment situation was considered a mixed report, but many market players seemed to think that the upward revisions were friendly news for the economy. A more detailed look at the employment report shows a lot more evidence of continued weakness than that of strength. As usual, the employment situation will set the tone for the month - and it is likely to be more bearish than bullish. And remember that thin volumes tend to permeate the lazy summer days of August (and this could add to market volatility).

Market players are factoring in another easing move by the Fed in the form of a 25 basis point rate cut. The next FOMC meeting takes place on August 21.