Inflation Data Sends Bonds Lower


The headline November CPI number fell more than expected
,
recording the largest drop in Consumer Prices in 56-years. Meanwhile Core CPI
(excluding food and energy) continued to rise


(report).


Many analysts feel the report shows inflation to be benign, however they are
clearly ignoring the fact the even after November’s drop, CPI is 3.5% higher
than a year ago and Core CPI is 2.1% higher than a year ago. Read Mark
Mahorney’s blog on the CPI today

here
.


Initial Jobless Claims ticked up last week


(report). Industrial Production growth came in above estimates
(report). The Empire State Index rose, showing improvement for New York manufacturers
(report).
The Philly Fed Survey showed moderate expansion

(report).

Go to our
Economic
News
section for more headlines and analysis.

The treasury market certainly wasn’t buying into the benign inflation story
as yields moved higher to reflect the likelihood that more rate increases will
be needed. The rise in Core CPI, combined with stronger than expected Industrial
Production and expansion in the manufacturing sectors caused treasuries to snap
a 2-day win streak. The US Dollar recorded its best gain versus the Euro in over
a week.

Energy prices were mixed, Natural Gas experienced a volatile session before
closing lower, despite the large drop in supplies.


Economic
News

CPI Down 0.6% For Oct.; Core CPI Up 0.2% (report)

Initial Jobless Claims Up 1,000 To 329,000


(report)

Empire State Index At 28.7 For Dec.


(report)

Industrial Production Up 0.7% In Nov.


(report)

Weekly Natural Gas Inventories: -202 Billion Cubic Feet

Philly Fed Up To 12.6 For Dec. (report)

Ashton Dorkins

ashtond@tradingmarkets.com


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