Monday was a great day for the green shoots, starting with purchaser reports out of China followed by a very solid ISM purchaser report on U.S. manufacturing where new orders, after 17 months, are finally on the increase. Other green shoots included a strong gain in personal income and better-than-expected construction spending data. There's more good news out of the banking sector as the Fed announced that 19 banks will start repaying their TARP injections next week. But Monday also marked the fully telegraphed bankruptcy of General Motors, a company that the government will downsize and will continue to support.
Stocks rallied powerfully on the data with the S&P 500 gaining 2.6 percent to 942.87. All the good news made for big talk of inflation which steepened the Treasury yield curve dramatically with the 10-year yield up 22 basis points to 3.68 percent. Gold shot up to $990 on the inflation concern before settling back to $975. Oil ended at $68. The dollar ended well up from lows, down only slightly with the dollar index off 0.1 percent to 79.24.