More Benign Inflation Data Boost Markets

Boy, that was some rally yesterday, right? I looked at some historical sites, and it didn't make it into any of the top 10 historical market moves, but it was still impressive.

This morning, the market got some more positive inflation data when the core PPI came in unchanged (vs. +0.2% consensus). Retail sales were also pretty good.

Bear Stearns (BSC) commented that it thinks the worst of the mortgage markdowns are behind it. This helped the stock pop higher, and also boosted the broker/dealer index, which is the leading index this morning.

The markets have eased off their initial pop, but are still hovering in positive territory. Asian markets were up huge overnight, with China and Hong Kong gaining nearly +5%. Also, the Yen is lower today, which is a big positive.

Oil is up today, trading near $93.43. This is helping the energy stocks. And bond yields are a bit higher, with the 10-year yield near 4.27%. I want to see this yield rise a bit just as an indication that the bond market doesn't think a recession is a foregone conclusion.

Last, Bernanke made some positive comments this morning, not about the economy but about how the Fed will try to increase its transparency going forward with greater communications. As the market hates uncertainty, I think any move to add more clarity into the Fed's process is a positive for the markets.