Wholesale inflation rises less than forecast

Gasoline prices rose as production
shortages in the Gulf Of Mexico showed virtually no improvement from yesterday’s
level and only slight improvement since a week ago.

The latest report by the US Minerals Management Service (full
) showed over 56% of oil production and more than 37% of gas
production remains offline.
The cumulative
shut-in oil production for the period 8/26/05-9/13/05 is 19,689,905 bbls, which
is equivalent to 3.596% of the yearly production of oil in the Gulf Of Mexico
(approximately 547.5 million barrels). The cumulative shut-in gas production
8/26/05-9/13/05 is 95.476 BCF, which is equivalent to 2.616% of the yearly
production of gas in the Gulf Of Mexico (approximately 3.65 TCF).

Crude Oil -0.23% and Natural Gas -2.43% closed
lower, while Heating Oil +1.43% and Harbor
Unleaded Gas
+0.96% closed higher.

The Producer Price Indexes for August were released today (click
here for the full report
). The PPI for Finished Goods rose 0.6%, less than
analyst expectations, while Core PPI (excl. food and energy) was unchanged. The
Government fascination with Core prices over real prices (which one can
argue neither the PPI or CPI reflect) has always been a mystery to me.

US treasuries rallied on the less than expected rise in
inflation. The US
10yr T-Note +0.27%, 5yr T-Note +0.17% and 2yr T-Note +0.08%.

The grains were mixed, among the more heavily traded contracts
Wheat +0.92% and Soybeans +0.17% closed positive but Corn
-0.24% was negative.

All the softs except Lumber +1.45% closed lower.
-2.73%, Cocoa -2.56%, Frozen Orange Juice +0.05%.

Livestock closed mixed with none of the contracts closing + or
– 1% for the second consecutive day.

The whole metals group fell, leading the decline was Copper
-1.13%, followed by Gold -0.82%, Silver -0.78%, Palladium
-0.67% and Platinum -0.26%.

Economic News

ICSC-UBS Store Sales:

W/W Change – Actual -0.2%

International Trade:

Trade Balance – Actual -$57.9 Bln Consensus -$60.0 Bln

Producer Price Index:

PPI, M/M Change – Actual 0.6% Consensus 0.7%

PPI (excl. Food and Energy), M/M Change – Actual 0.0% Consensus 0.1%

Treasury Budget:

Actual -$50.0 Bln Consensus -50.0 Bln

Ashton Dorkins