Wednesday's Headliners: Beige Book

The Fed's latest beige book will be one of several highlights Wednesday, a day that will also see the release of a handful of other key economic data and an auction of 10-year Treasury notes.
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The

Federal Reserve's

latest beige book release will be one of several highlights Wednesday, a day that will also see the release of a handful of other key economic data and an auction of 10-year Treasury notes.

The beige book report, published by the central bank for the fourth out of eight times this year, summarizes business activity in the Fed's 12 districts. In the last report released in April, five districts noted a moderation in the pace of decline, and several saw signs that activity in some sectors was stabilizing at a low level.

The manufacturing activity in the beige book will be interesting to watch, after most districts reported a decline in activity in the last release. Last time, the Cleveland district noted some leveling off in declines in new orders, and the New York and Dallas districts noted that demand was beginning to bottom out following steep declines.

Of course, consumer spending and real estate will be important to investors. In the April report, consumer spending was classified as generally weak, which was obviously no surprise to traders, and the housing markets remained depressed. However, some of the Fed's districts noted moderating declines in consumer spending and some signs that weak housing conditions were stabilizing.

In addition to the beige book, the Treasury budget for May is due to be released Wednesday at 2 p.m. EDT. The trade deficit was already released, showing a deficit of $29.2 billion, wider than economists' estimates of $28.7 billion.

Several Treasury note auctions are being held this week, with perhaps the most important one scheduled for Wednesday. Investors are hoping a $19 billion auction Wednesday of 10-year notes will be as successful as Tuesday's $35 billion auction of 3-year notes. While Tuesday's sale drew a yield of 1.96%, which was slightly below forecasts, the bid-to-cover ratio for the 3-year notes was a solid 2.82.

Those interested in the bond sales also hope the 10-year note auction will be as successful with foreign investors as Tuesday's auction was. Indirect bidders for 3-year notes, which includes foreign central banks, was 43.8%, better than it has been in previous months.

Investors looking to stock-related news ahead of Wednesday's session were keying on

Home Depot

(HD) - Get Report

, which raised its fiscal-year earnings outlook.

Oil companies will bear watching after oil closed above the $70 a barrel level Tuesday for the first time since November. On Wednesday, the Energy Department will post its weekly inventory report. According to a

Bloomberg

survey, analysts were split over whether crude-oil stockpiles rose or declined last week, although gasoline supplies probably rose 750,000 barrels, the first increase in seven weeks, according to the survey.