The Producer Price Index (PPI) may not be nearly as much of a market mover as the Consumer Price Index (CPI), but it has proven capable of producing logical reactions in the past when it's come in much higher or lower than expected. Today's installment was much lower than expected--something that should be good for bonds. While there was a brief, initial rally, it was quickly erased and bonds returned to relatively unchanged levels.

The easiest explanation is that the market is preoccupied with CPI and there's limited directional correlation on any given individual month.

The deeper explanation is that the PPI components that flow through to consumer inflation didn't miss the market as much as the headline suggested.