Stocks' Slide Invigorates Bonds

A bruiser of a wholesale inflation report briefly sent the bond market running scared this morning. But then it turned on its heels and headed boldly higher as some economists argued that the inflation report was more smoke than fire, and as stocks took a beating that sent money flowing into bonds.

The benchmark 30-year Treasury bond, which traded down as much as 17/32 after the release of the September Producer Price Index and which hadn't had a price gain since last Wednesday, ended the day up 27/32 at 98 4/32, trimming its yield 7 basis points to 6.26%. Shorter-maturity note yields shed anywhere from 7 to 9 basis points.

The PPI, the key measure of inflation at the wholesale level, rose 1.1% in September, more than twice as much as forecast and the largest increase since September 1990. The core PPI, which excludes volatile food and energy prices, rose 0.8%, twice as much as forecast and the biggest increase since last December. ...