It’s another day of slow economic news but, unlike yesterday, US markets are looking down, potentially ending three days of gains. Globally, European equities are performing strong while China’s Shanghai Index post its seventh straight gain, but equities in Japan and Hong Kong each fell around 1%.

Today's major release is at 2:00, when the Federal Reserve releases the Beige Book, an anecdotal summary of the economy written by each of the 12 District banks. With many economists believing the recession technically ended in May or June, analysts will look to the report to see how central bankers assess the economy just ahead of the September 22 FOMC meeting.

"The survey will likely report a patchy recovery, boosted by the auto cash-for-clunkers program, and continued downward pressure on wages and prices," said Ian Shepherdson of High Frequency Economics.

The details could certainly have an impact on equity markets, but as for policy, the Fed has made it clear that an accommodative stance will be the norm well into 2010.

Recapping yesterday afternoon’s economic news, consumer credit contracted by $21.5 billion, compared with forecasts looking for a decrease of just $4 billion. That marks the sixth straight contraction ― the longest string of declines in 18 years ― with July being the weakest month in almost four decades. 

“This pulled the annual change down to -4.5%, the worst y/y rate in 65 years!” said BMO analyst Michael Gregory. “Despite all the hoopla about the cash-for-clunkers drive out of recovery, all recoveries are destined to run out of steam without credit creation working in the boiler.”

In fixed income, the benchmark 10-year yield has moved to 3.48%, up from 3.42% in the early afternoon yesterday. The Treasury holds two auctions at 1:00 today, in 4-Week Bills and 10-Year Notes.