Economic reports this past week presented a picture of a continued negative outlook for the economy. Among the more significant reports which helped to spread the gloom for were reports on the Producer Price Index (PPI), new home building permits, the Consumer Price Index (CPI) housing starts, initial jobless claims and the index of leading economic indicators.

Core PPI was reported to have a slight increase and exceeded forecasts, showing an increase of 0.4% versus a forecasted o.1%, which was the increase the previous reporting period. PPI, however, declined by 2.8%, due primarily to the drop in oil prices, giving rise to renewed fears of deflation and recession.

Building permits declined at a rate which surpassed forecasted levels, and the CPI fell into negative territory, dropping 1.0 % against a forecasted 0.8%. The index of leading economic indicators dropped 0.8% and capacity utilization held steady at the previous month's low level of 76.4%.

The most significant negative reports were regarding building permits and jobless claims. Building permits had been forecast to come in at 772,000 units but actually were reported at 708,000, and jobless claims increased to 542,000 initial claims, against an expected 503,000.

The Federal Reserve Bank added fuel to the recession fears with a revised outlook on the 2009 economy, forecasting growth to be in the range of negative .2% to 2%.

The market responded to this mostly negative news with the benchmark bond yields falling to the lowest levels in years. Yield on the 10 year treasury fell to a record low of 3.06% and a record was also set on the 30 year treasury, which is now yielding 3.61%.  Adding to the negative outlook on the economy, oil dropped below $50 per barrel; further fueling deflationary fears world-wide.

Market watchers will have additional cause of woe with the relatively sparse economic news to be released this holiday shortened week. The following reports will be anxiously anticipated by market participants:

The biggest surprise for the week would be that the reports come in within forecasted levels. With the extraordinary stresses of the last month, it is hard to imagine that there will be no downward surprises in the data. Treasuries will continue to represent the only safe haven from the uncertainties of the market.

For the willing investor, however, the levels at which the high yield markets are trading offer extraordinary opportunities today. Even with the uncertainties of the availability of government support for the auto industry, there are many of the companies with debt in this sector which are extremely attractive today.

This article was written by Jamie Dlugosch, contributor to InvestorPlace.com. For more actionable insight like this, visit www.InvestorPlace.com.