Market Analysis

The bond market experienced heavy selling in the morning as a result of higher than expected wholesale inflation data and better than expected production data.  The selling abated somewhat during the afternoon, however as investors digested a very weak manufacturing report for the New York region.  Mortgage rates moved up approx .125% today as a result of the early morning deterioration.

In economic news, November's Producer Price Index (PPI) was up 1.8% (vs expecations of a 1% increase) and the core rate, excluding food and energy was up .5% (vs expectations of a .3% increase).  November Industrial Production was up 1.8% (vs expecations of a .6% increase) and Capacity Utilization was 71.3% (vs expectations of 71.2%). The Empire State Manufacturing Index, however, came in way below expectations at a reading of 2.55 (vs expectations of a 25.0 reading).