Today, bonds rallied. If you lost 12% in Yahoo! Inc. (NASDAQ:YHOO) shares, or around 3% in Google or eBay today? You could have made money in bonds.
Already at the start of the day, before the bell, Producer Price Index data came in favorably, rising 0.1% in August (economists expected 0.2%). Core PPI (ex-food and energy) actually declined 0.4% when economists expected is to rise by 0.2%. Inflation - check.
At the same time, housing data was released and housing starts actually dropped by 6% in August to 1.665 million seasonally adjusted annual rate, much less than the 1.75 million that was expected. Building permits, fell to 1.72 million annual rate in August from a 1.76 million rate, again lower than economists' expectation of 1.74 million. Slowing growth - check.
Then we had the Yahoo! 12% plunge. Decker and Semel, Yahoo!'s CFO and CEO talked in an investor conference sponsored by Goldman Sachs saying two things of importance: 1) Yahoo! will probably report results in the lower half of the range it had forecast - and smack - down goes Yahoo!. 2) Demand was weakening a bit for the online advertising market as the economy shows signs of slowing - and wham - down go Google and eBay and other techs. But guess what - slowing growth - check.
And as if that wasn't enough, we actually had a military coup to boot.
Oh, and did I forget to mention that tomorrow is the usually-dreaded FOMC meeting? No rate hike is expected this time, especially in light of good CPI and PPI numbers, as well as the tame housing and retail markets.
At the end of the day, the sell-off in the stock markets wasn't that bad as the Dow closed down 0.12%, the NASDAQ down 0.60% and the S&P 500 down 0.22%.
And so, to make a short story long, however, bonds rallied today as the yield on the 10-year benchmark Treasury note was down to 4.740% from 4.808% late Tuesday and down from 4.82% early this morning.
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