Our benchmark FNMA 5.5% mortgage bond traded in an expanded 98bp intra-day range, reaching a gain of 78bp at one point, before getting hit with profit-taking late in the session on the exaggerated move to settle for a 22bp gain and a close at $102.06. Fed Chairman Ben Bernanke provided the fireworks for the bond market this afternoon during a speech before the Greater Austin Chamber of Commerce in Austin, Texas. Bernanke said further interest-rate cuts are 'certainly feasible' and restated the Fed's plan announced last week to spend $500 billion on the purchase mortgage-backed securities guaranteed by Fannie and Freddie, and another $100 billion to directly purchase longer-term mortgages held by Fannie, Freddie and the Federal Home Loan Banks over the next few quarters. The news sent mortgage bond prices soaring until a bout of profit-taking set in. Mortgage bonds got off to a positive start from the Open following news of bad retail sales data in Germany and a large drop in manufacturing reported throughout Europe. Manufacturing was also down considerably in the U.S. as the national ISM Index for manufacturing activity during November was reported at 36.2, a 26-year low, vs. expectations for 38.0. Values below 50 indicate a contraction in manufacturing activity. The new orders index fell to 27.9 from 32.2, its lowest level in more than 28 years. The employment index fell to 34.2 from 34.6, its fourth straight monthly decline. Construction Spending in October fell 1.2%, exceeding the -0.9% drop economists predicted. These reports indicate the economy is in a steep recession. In fact, the National Bureau of Economic Research announced the economy fell into a recession beginning in December 2007. The stock market underwent an extreme, negative reaction to the recession news with the Dow plunging 679 points to close at 8,149. The broader S&P 500 Index plummeted 80 points to end at 816 and the NASDAQ Composite Index fell 137 points to finish at 1,398.