Stocks closed higher yesterday with the big three indexes gaining ground as the day wore on. The Nasdaq also hit a new milestone, making a new all-time high close.

Yesterday's Producer Price Index (PPI) inflation report came in a bit higher than expected. The headline number rose 0.5% m/m vs. last month's downwardly revised -0.1% (from 0.2%), and views for 0.3%. On a y/y basis it came in at 2.2% vs. last month's downwardly revised 1.8% (from 2.1%), and estimates for 2.2%. The core rate (ex-food & energy) was up 0.5% m/m vs. last month's downwardly revised -0.1% (from 0.2%), and the consensus for 0.2%. The y/y rate came in at 2.4%, the same as last month, and only slightly higher than the estimates for 2.3%. Looking at the numbers excluding food, energy & trade services, it was up 0.4% m/m vs. last month's 0.2%, while the y/y rate was up 3.1% vs. last month's 2.8% pace.

The report could have been worse. And the downward revisions were a bit of a surprise. All in all, it allowed the market to shrug it off and add to their gains.

Although, we'll get another look at inflation this morning with the Consumer Price Index (CPI) inflation report. The PPI is wholesale inflation. The CPI is retail inflation. The estimates are for headline CPI to come in at 0.3% m/m vs. last month's 0.4%, while the y/y rate comes in at 3.4%, down from last month's 3.5%. The core rate is expected to come in at 0.3% m/m vs. last month's 0.4% pace, with the y/y rate coming in at 3.6%, down from last month's 3.8%.

Those would be fine numbers if the consensus was met. And it would suggest that disinflation is back on.

That report comes out at 8:30 AM ET.

Yesterday, Fed Chair Jerome Powell, commented on the outlook for interest rates while participating in a discussion at the Annual General Meeting of the Foreign Bankers' Association in Amsterdam. He reiterated the idea that rates could be held higher for longer, but also dismissed the idea of raising rates by saying "the next move that we make would be more likely to hold the policy rate where it is."

He also lauded the strength of the U.S. economy by noting it's "been performing very well lately."

A strong economy, high enough interest rates to keep inflation from rising in any meaningful way, while also allowing the economy to expand, is a recipe for continued gains in the market.

In addition to this morning's CPI report, we'll also get MBA Mortgage Applications, the Housing Market Index, Retail Sales, the Empire State Manufacturing Index, and Business Inventories.

Should be a busy day. And if all goes well, we could be at new all-time highs by day's end.

See you tomorrow,