Economic News: Good, with a Touch of Bad

But other things are going on besides the outing of Shrill Shill.

May's readings on inflation were greater than expected:

Prices received by farms, factories and refiners shot up a hefty and more-than-expected 0.8 percent last month, the largest jump since March 2003, the Labor Department said.

While food and energy prices both rose sharply, the department's core producer price index, which strips out those volatile costs, gained a larger-than-expected 0.3 percent, adding to inflation jitters on Wall Street.

They'd expected a .6 rise in CPI, and a .2 rise in the core producer price index.

That's not good for Wall Street.

On the other hand...

Also, a regional manufacturing survey showed strength, though it bore some pockets of softness. The Philadelphia Federal Reserve's June business activity index climbed to 28.9 from 23.8 in May, beating forecasts of a rise to 25.0.

In a separate report, the Labor Department said first-time filings for state jobless aid fell 15,000 to 336,000 in the week ended June 12, their lowest level since early May.

...

Also on Thursday, the Conference Board, a private business group, said its index of leading economic indicators rose 0.5 percent in May to 116.5, suggesting the U.S. economy's momentum is likely to build in the coming months.

Note the word "build." Not "continue." Build. As in quicken in pace.

Finally:

A four-week moving average of claims, which smooths weekly volatility to provide a better picture of underlying trends, slipped 2,750 to 343,250. The average has been hovering since early March near levels not seen since early 2001, before the economy tipped into recession.

Actually, the economy tipped into recession in late 2000, but I take their point.

The markets are reacting fairly neutrally to the combination of inflation worries and very positive economic news. I'm speaking out of my hat here, but I kinda think the markets want that .25 rate hike in June -- or even a .5 hike -- just to get it over with. Maybe it's the current fear of the rate hike -- which everyone knows is coming -- which is keeping markets moving sideways.