“People were fearing disaster [in this morning’s Producer Price Index (PPI) report]. They got a report that wasn’t too far from the consensus, and it led to a rally.”
– Brian Reynolds (subscription required), Chief Market Strategist, MS Howells
May Core PPI (pg. 1, Table A) came in at an expected .2% rise from April which puts everybody at ease that there’s really no immediate need for the Fed to raise rates.
May CPI report is out tomorrow before the open. Expectations for the core CPI are .2%. If it comes in that way, the “Fed will raise” case for higher yields disappears in the short term and stocks should be free from that fear.
Here’s how things look an hour and a half in (11:00am EST):
Dow: +62, to 13,544
S&P: +8, to 1523
10 Year Treasury Yield: -2 basis points, to 5.19%