Our benchmark FNMA 5.0% bond reached a multi-year high of $101.90 with a 53bp gain at one point during today's session before getting hit with profit-taking to end 28bp higher at $101.56. A day of terrible economic news and a bogged down bailout bill for the Big 3 automakers in Congress forced investors to flee the stock market and seek the relative safety of bonds. Weekly Initial Jobless Claims jumped to a 26-year high with an increase of 58,000 to reach 573,000 claims vs. a consensus estimate of 525,000. The 4-week moving average increased by 14,250 to 540,500, also a 26-year high. The claims data continues to show the labor market at recessionary levels. The Labor Dept. reported Import Prices plunging by a record -6.7% during Nov. with crude oil leading the way with a record 25.8% drop. Non-oil import prices fell 1.8%, a record decline. Export Prices also fell a record amount, plunging by 3.2%. The U.S. Balance of Trade reached a greater than expected deficit of -$57.2 billion in Oct. vs. a forecast of -$53.5 billion. One outcome of the poor economic news was a sharply falling U.S. dollar against major foreign currencies such as the euro and yen. This triggered a spike in oil and gold prices with oil futures jumping by more than 12% at one point. Jan. crude oil ended $3.69 higher at $47.21/barrel while Dec. gold rose $10 to $817/oz. The Treasury re-opened a 10-year Note auction for $16 billion with an 'OK' 2.44 bid to cover ratio and a foreign participation level of 12.7%. A gloomy UCLA Anderson Economic Forecast report was released projecting a deep recession for 2009. The report forecast a 4.1% reduction in GDP for the 4th Qtr. of this year followed by 3.4% and 0.8% declines in GDP during the 1st and 2nd quarters of 2009, respectively. The report goes on to state there will be a loss of another two million jobs next year with the unemployment rate reaching 8.5%. Deflation risk will become more of a threat than inflation with lower consumer demand and plunging commodity prices. OPEC is expected to try and stop the recent record drop in oil prices by enacting a major production cut at their next meeting on Dec. 17 in Algeria. The Dow retreated 196 points to close at 8,565 while the broader S&P 500 Index lost 25 points to end at 873. The NASDAQ Composite Index fell 57 points to finish at 1,507.