The core personal consumption expenditure price index, excluding food and energy, increased 0.2% for the third straight month in June, and has risen 2.4% in the past 12 months, matching the largest year-over-year gain since April 1995's 2.5% increase.

The core rate had also risen by 2.4% on a year-over-year basis in September 2002 and in May 1995.

Consumer prices including food and energy also rose 0.2% in June, and are up 3.5% in the past year.

Meanwhile, personal incomes rose 0.6% in June, outpacing the 0.4% increase in consumer spending.

But with the journey getting only more difficult to fathom, two of the most independent, clear, and articulate Fed officials -- St. Louis Fed President William Poole and San Francisco Fed President Janet Yellen -- left the way ahead as murky after their remarks as it was before.

Financial markets have come to cautiously price in a rate pause by the Federal Open Market Committee in August, even though testimony from Fed Chairman Bernanke, the Beige Book and the minutes of the June 28-29 FOMC meeting have all been evenhanded about the risks of higher inflation and slower growth.

Aside from Bernanke's congressional testimony, the speeches by Yellen and Poole on Monday were the first and last public comments from FOMC members between the June and August meetings.

The markets have come to rely on Fed speakers to guide their expectations about near-term monetary policy. But neither Poole nor Yellen gave any clear signals about whether the Fed would raise rates for an 18th straight meeting or pause.

Both officials said the decision is still up in the air, at least in their own minds, and would depend in part on the analysis of incoming data, such as the July jobs report on Friday, the July Institute for Supply Management index on Tuesday, and perhaps even the second-quarter productivity report due out the morning of the Fed meeting next week.

Uncertainty about the Aug. 8 meeting was the watchword of the day. The two officials seemed to shrug their shoulders about the larger question of when the central bank will be done raising rates.

The only common thread between the two speeches on Monday was "in the fact that they don't give us a real strong signal as to what is ahead," said Kim Rupert, economist at Action Economics.

"They still kind of leave us wanting more. They aren't conclusive in terms of what they are going to do next week," Rupert said.

The officials emphasized the complicated picture facing the central bank with the combination of fresh signs of a slowdown and a pickup in inflation pressures.

"That is where all of us are. Data are spelling out two different paths for them to take. So really, which one do they choose? It is a difficult choice," Rupert said.

First, Poole said that he was still on the fence about what the Fed should do. See full story.

Poole said that there has been negative news about both growth and inflation since the last FOMC meeting on June 29.

Poole was followed in a few hours by Yellen, who said it was a "tricky time" for policy. See full story.

Yellen said she believed the Fed should end its automatic rate hikes, but insisted later that this was no guide for short-term policy.

"We are at a delicate point for policy when we are close to the end of the road. I've on the one hand indicated that I do see a slowdown reining in the economy, but that inflation is too high," Yellen said.

"Basically the message seems to be they are evaluating the data as we are evaluating the data," said Dan Seto, senior economist at Sumitomo Mutsui Asset Management.

"I guess we forecasters don't pay enough attention to how much uncertainty they face as well," Seto said.

"They are in a very difficult position," he said.

Seto said whether the Fed pauses in August depends on the "internal politics of the FOMC."

But Fed transparancy has made this is an impassable thicket.

That's because under the Bernanke Fed, there's been an unwillingness to publicly dissent.

The minutes of the FOMC meetings makes it clear that the members argue vociferously behind closed doors even if the final judgment is unanimous. But the FOMC minutes are deliberately vague about how many FOMC voters are on opposite sides of an argument, simply saying "some" members or "many" members hold different positions.

So investors and financial markets are lost in the woods about August 8. Maybe now is not a good time to remind them that there is some potential bearishness out there.

The 10-year benchmark Treasury note last was 3/32 lower at 100 29/32 with a yield of 5.006%, up a bit from 4.989% at Friday's close. Bond prices and yields move in opposite directions.

The 30-year Treasury bond was down 4/32 at 91 5/32, yielding of 5.081%.

The 2-year Treasury note was unchanged at 100 1/32 with a yield of 4.992%.

Treasury investors want to see more in the way of economic data and hear more talk from Fed officials before extending last week's rally.

On Friday, Treasurys scored sharp gains after an unexpectedly weak reading on second-quarter growth in U.S. gross domestic product stirred demand for bonds and helped build a case for the Fed to stop lifting rates.

However, on Monday St. Louis Fed President William Poole said he though the chances for another rate hike stand at about 50-50, after a speech on U.S.-Chinese economic relations, according to Action Economics.

Poole doesn't have a vote on the policy-setting Federal Open Market Committee at the moment, but his remark could disappoint investors who last week allowed themselves to believe that it is highly unlikely that FOMC will put in place another rate increase at the August 8 meeting.

The latest monthly Chicago purchasing managers report also showed dented some of the certainty that investors recently felt about rate hikes winding to a speedy close. Continued heavy factory activity would indicate that the economy remains brisk enough to keep pressure on the Fed to continue lifting rates. See full story.

The National Association for Supply Management-Chicago said its headline index rose to 57.9% from 56.5% in June. Economists were expecting the index to fall to 55.8%.

Readings over 50% indicate growth in the region. The new orders index rose to 60.0% from 57.2%

The MarketWatch forecast, based on a poll of economists, is for a reading of 55.7%, which would be down from 56.5% in June.

The data highlight of the week is likely to come on Friday, in the form of the latest monthly nonfarm payrolls report -- data that are closely monitored by the inflation-minded Fed in setting monetary policy.

The MarketWatch forecast, based on a poll of economists, is that 141,000 jobs were created in July, which would be up from 121,000 in June. Average hourly earnings are expected to show a 0.3% advance, down from a 0.5% gain in June.

"The Employment Report offers something for everyone," said Kevin Giddis, managing director of fixed income at Morgan Keegan.

"The payrolls number is important for the economic hawkers and the average hourly earnings number looms large, because the fact that inflation is the new market buzzword and no one uses it more than the Federal Reserve," Giddis said.

"So here we are. It's Monday, it's hot outside, and there is no better place to be than in an air-conditioned space cheering for longer lines at the unemployment counter," Giddis said. "The next five days will mean a lot to the bond and stock markets."

'The economic numbers, better known as the 'data,' will rely heavily on current and future price activity," he said. "Why? Mainly because of their timing. It is widely thought of that the Federal Open Market Committee will be making future rate decisions on this week's data."

Later Monday morning, San Francisco Fed President Janet Yellen will speak on the U.S. economy. Investors hope she will offer more insight into how Fed officials are leaning on an August rate hike.

Economists believe that the July payroll data, to be released Friday (04th August), might provide the definitive answer as to whether the Federal Reserve Board raises interest again in August or pauses for the first time after seventeen rate hikes over the past two years.

"The Fed is likely sitting on the fence and this number is likely to be the tie-breaker," said Avery Shenfeld, senior economist at CIBC World Markets in Toronto.

"It is close enough to 50-50" and the job report will push the Fed in one direction or the other, agreed, James O'Sullivan, economist at UBS Securities LLC.

Economists surveyed by MarketWatch are looking for acceleration in job growth in the month - to 140,000 jobs -- and for the unemployment rate to remain steady at 4.6%. See Economic Calendar.

Job gains have been anemic in the second quarter, averaging 108,000 jobs.

Average hourly earnings should rise 0.3% in the month after rising 0.5% in June.

If the numbers come in on consensus, the Fed is likely to pause, said Nigel Gault, chief domestic economist for Global Insight.

"It looks like the Fed is keen to take a break and see how things pan out. Numbers like these wouldn't shift them from that view," Gault said.

If job growth tops 200,000 in July, the Fed might think twice about pausing, he said.

Sluggish job growth below 100,000 will reinforce the view that the economy is really slowing down and a pause is warranted, Gault said.

The jobs report will overshadow a key report on the strength in manufacturing activity in July.

The Institute for Supply Management will report Tuesday on its monthly manufacturing activity index.

Economists are expecting the diffusion index to decline slightly to about 53.6% in July from 53.8% in June.

Readings over 50% indicate economic expansion.

The ISM's nonmanufacturing survey, to be released on Thursday will probably hold steady at 57.0%.