Plunge in PPI Takes Bond Yields To Recent Lows

The market is roughly flat at the open, after getting a nice bounce after the PPI data. Oil and gas are up a little bit, which is helping the energy complex.

But the big news this morning was the dramatic drop in the Producer Price Index (PPI). The PPI fell -1.6% vs. -0.5% consensus. This was the largest drop in years, and yet another indicator that inflation pressures are easing, and the peak in inflation is behind us.

The news sent bond yields to new monthly lows, with the yield on the 10-year note down 5 basis points to 4.56%. Most interest-rate sensitive securities are up across the board.

Retail sales were mixed this morning, with some strong reports from specialty retailers and weak reports from the housing-related retailers.

In other news and notes:

• The Nikkei gains +1.7% overnight
• WMT beats earnings. guides in-line
• Fidelity slashes stake in YHOO over last 4 months
• AEOS beats EPS, raises guidance
• ESRX raises FY07 guidance; stock up
• TGT beats EPS by 4 cents
• New study says stents don't cut heart attack risk