The US released its PPI for the month of May opposing expectations of 1.0 percent coming in at 1.4 percent compared to the previous 0.2 percent reading. For the year ending May, prices from the producer side jumped 7.2 percent where the prior was 6.5 percent and the forecasted was 6.8 percent.

Energy prices leaped 4.9 percent while food rose 0.8 percent and were the main drivers to the soaring of prices in the production pipeline. Crude goods jumped 6.7 percent in May alongside energy materials which have jumped 13.1 percent. Prices for pork inclined 8 percent marking the largest since 1999 while prices for fresh fruits and melons gained 5.9 percent.

Further down the production process, prices for intermediate goods were up by 2.9 percent in May whereas the core intermediate rose 2.0 percent the same month being the largest gain since early 1980. And this is considered as a key leading indicator of inflation and so pretty much will be taken into consideration.

Core PPI Output for May was inline with expectations at 0.2 percent slipping from April's 0.4 percent reading. The annual reading was unchanged from the previous and inline with predictions at 3.0 percent.

This is where the tragedy comes in! Inflation is really on the surge and growth is still faltering. Yesterday we saw data from the manufacturing sector indicating hat the status of manufacturing firms in the New York area doesn't look good and so this brings the Feds back to square one on whether they should be dovish or hawkish.

Markets have been placing bets that the Feds will hike rates some time this year as it seemed like there was room for maneuvering yet surprisingly, the dollar fell in the morning after Fed members said the markets have been expecting way too much. But how accurate is this? Yesterday, the President of the Federal Reserve Bank of Richmond said that it would make perfect sense to raise interest rates on the short term. However, this is where housing comes in...

The housing sector is still deteriorating and has yet to reach the bottom of the whole and we've seen it drag the whole economy down with it and so what's going to stop it now?! Housing starts fell to a 17 year low in May as builders desperately were trying to reduce supply taking starts down by 3.3 percent o to 975,000. This level hasn't been seen since 1991. Single-family home starts fell 1 percent to 674,000 marking the lowest in 17 years.

What's being seen lately in the housing sector is that they are trying to make supply meet with the waning demand. But as they do that, not only is confidence by consumers dropping, but a report released showed that builder's sentiment fell to its lowest ever since the report started 22 years ago.

In addition, permits for building fell by 1.3 percent to 969,000 in May lead by the reduced number of permits filed for single family homes as it dropped 4 percent to a 623,000 rate and fell 8 percent for multifamily in May. Dividing this regionally, we see that starts leaped 61.5 percent in the Northeast but fell in the other three regions.

The whole crisis started from the housing sector and we know that the sub-prime mortgages was the reason behind the credit crisis; yet data released concerning housing isn't sharp as the data could be subject to massive revisions therefore making it very volatile. It pretty much takes four months for a new trend to emerge from the data.

The Feds are expected to meet next week and the data released today will not have much influence on the decision to be released where it is believed that the Feds will hold rates steady. It's still hard to determine the degree of imbalance between growth and inflation at a time now where we see such data being released yet the Feds were turning more to their hawkish side signaling that inflation was their number one priority and that they would take drastic measures to cool down prices.

That wasn't the end of bad news for the US today, in another report released by the Commerce Department, the current account deficit widened further to $176.4 billion in the first quarter compared to the revised fourth quarter deficit to $176.2 billion from $172.9 billion. Lower incomes and wages was the driver to a widened deficit as it has now become 5 percent of the gross domestic product of the US.

Finally, the Federal Reserve reported today that the output of the nation fell for the third month out of four and the industrial capacity dropped to its lowest level since November 2004. Over the past year, industrial production was down 0.1 percent for the first time since 2003 but down 0.2 percent in May. Capacity utilization 0.2 percentage points to 79.4 percent in May fro 79.6 percent in April.

By the end of the release of these fundamentals, the dollar slipped against majors in the markets as the market sentiment has slightly altered now favoring less of a hike in the markets. In addition to the previous statements saying that the markets have locked in too much of an effect, this was just all it needed. But again none of this can be determined until what we see will happen in the next meeting and minutes to be released.

Many believed there would be a series of hikes starting in the summer but the Feds are stressing the fact that rates will most likely remain steady next week and they won't consider hiking their benchmark anytime before autumn unless inflation flies even more. We've seen many surprises in the markets before and nothing can change that fact. So if anything comes up, maybe speculations will return back to the current expectations in which the Feds still have three chances to hike rates before the end of the year.

It's the end of a hectic day and pretty much for the rest of the week as the coming days will be much calmer. All eyes will now monitor any words from the mouths of the Feds until their next meeting in a week's time.