The living yield curve continues to flatten. This is a sign that the economy is slowing, but the Fed is still tightening. If PPI is a bad number this morning, which the bond market seems to be forecasting, I'd have to say this all adds up to a negative for equity markets.

With some improvement to equity prices apparent on global bourses this morning, and for pre-open U.S. equity futures, the USD, which had been weakening, is now stabilizing. The economic data that is coming out in 25 minutes will have an impact on the USD, and that may portend the near-term direction of equity prices.

12.30pm update: Investors seem to have interpreted the PPI data as a positive. Bonds are now up and so are equities (Dow is +50). But, and this is crucial; the USD is down and Gold is up $5.30. So, the Gnomes do not believe in the equity/bond market rally, and they are selling the USD and buying gold bullion and goldminer shares.