Bernanke's evening address in Michigan on Monday didn't contain any notable tape-bombs, essentially giving the all-clear for the rest of the week's data and events.  Apart from two other Fed speakers, there was precious little to offer guidance on Monday's slow, contained session.  But when the Fed Chairman spoke and answered questions, we didn't really hear anything new, surprising, or all too clarifying.  He was right down the middle, giving some attention to the need to assess the effectiveness of QE as well as noting that tightening policy too soon could cause a recession. 

There will be more Fed speakers on Tuesday, including Boston Fed's Rosengren, now a voter in 2013, who has previously been a staunch proponent of the efficacy of MBS-targeted QE.  In early December, Rosengren noted that accommodative policy was "quite appropriate" given the pace of the recovery, and that MBS purchases likely have an impact beyond the mortgage market.  Although he noted possible market disruptions relating to Fed bond buying, it's fair to say that Rosengren's thoughts early last month were clearly on the more accommodative end of the spectrum of Fed voters for 2013.  Because of that, and because he's the only voter speaking tomorrow, markets will be looking for any shift in tone compared to last time.

Rosengren's 8:00am speech may help set the tone early in the session, but three pieces of economic data hit at 8:30am, one of them being the important Retail Sales report.  In light of the focus on Fed policy and the looming debt-ceiling debate, it's hard to know how much of this report's traditional importance will remain, and any major deviations from the +0.02 forecast will provide valuable insight as to the relative importance of data through the rest of week.  The other two reports include the Producer Price Index and the Empire State Manufacturing Survey.  Markets haven't reacted sharply to inflation numbers in quite a while, so PPI is back burner, and Empire State would have to be quite far from consensus in order to overpower any suggestions made by Retail Sales.  Markets are already expecting the first positive reading in 5 months at +2.0 vs -8.10 previously