After closing below its 10-day SMA for the first time in a month, ES is backtesting it……on the back of PPI data that essentially echoed yesterday’s CPI print. Headline PPI crashed to 2.7% YoY and -0.5% MoM. Though stripping out food and energy, core PPI fell only 0.1% MoM and increased 3.4% YoY.

As we discussed yesterday, 80% of the MoM decline was due to the sharp drop in gasoline prices.

Also out this morning, credit portfolio managers agree with the Fed’s assessment that the economy is headed for recession. It’s a troubling backdrop as we enter earnings season in the midst of a credit crunch.

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