Treasuries are steady and equities are rising Wednesday morning as investors shift focus from European debt problems to macroeconomic data and corporate earnings.

The relative calm follows a weak market Tuesday triggered by a lack of resolution from German Chancellor Angela Merkel and French President Nicholas Sarkozy. 

"European markets continue to fret about the global economic slowdown," noted economists at BMO Capital Markets. "Expectations were high for an announcement on a Euro bond but the leaders dismissed the concept....for now."

Treasuries are steady in the short-end and softer in the longer-end. The two-year yield flat at 0.19%, the 10-year yield is one basis point up at 2.23% and the 30-year yield is a single basis point higher at 3.68%. The Fannie Mae 4.0 MBS coupon is -2/32 at 104-09.

Equities have rebounded modestly from Tuesday's losses. S&P 500 futures are 4.4 points higher at 1,196.70 and Dow futures are 25 points higher at 11,412. 

Meantime, light crude oil rose 1.41% overnight to $87.87 per barrel, while gold prices rose 0.47% to $1,793.40.

Just released, the MBA mortgage applications index rose 4.1% in the week ending August 12, led by refinancings and offset by purchases.

Key Events Today

8:30 - Expectations range widely for July's Producer Price Index. Following a 0.4% cut in July, the median forecast is +0.1%, and predictions go from -0.5% to +0.4%. 

Economists at Nomura point out that energy prices increased in July but declined on a seasonally adjusted basis. Those at IHS Global Insight pointed out that "no big moves in energy or food items are anticipated this month."

So why the range of predictions? It may be due to the timing of the report.

"We think producer prices reversed last month's decline due to a pop in gasoline prices. Already, we see that the jump in energy prices will be short-lived," said economists at Citigroup. "But the PPI uses a mid-month to mid-month survey period, and during that time there was a notable price rise. Excluding food and energy, prices have consistently run in the 0.2% - 0.3% range, and that includes some recent, hefty increases in light vehicle prices related to shortages from the twin disasters in Japan."

1:20 - Richard Fisher, president of the Dallas Fed - and one of the dissenting voices at last week's FOMC meeting - speaks on Fed functions and monetary policy.