CPI and New Construction Data is out....

Consumer level inflation was "on the screws" while Building Permits were better than expected.

10s havent made much progress in either direction after the data and the FN 4.5 has cheapened up a few ticks but is essentially unchanged.

Plain and Simple: the market got what it was expecting

The 10yr TSY note is +0-00+ at 98-06 yielding 3.592%...

The FN 4.0 is -0-02 at 97-29 and the FN 4.5 is -0-02 at 100-25...

The market may go into a holding pattern until 2:15 when the FOMC statement is released. It may also improve after much weakness has been priced in over the past few days....look for 10s to test 3.57 and go from there.

Many are hoping for a slightly more optimistic economic outlook from the FOMC while others want to see more anti-inflation rhetoric make its way into the text. I say Ben will avoid spooking the markets in this illiquid year end environment, that said...he should continue to lean on "resource slack" as an anti-inflationary crutch.

We dont expect to hear much in regards to the extension of the MBS purchase program...not yet at least.

Here is a recap of the data..

NOV CPI +0.4 PCT (+0.3998; CONSENSUS +0.4), EXFOOD/ENERGY UNCH (+0.0336; CONS +0.1 PCT)
CPI YEAR-OVER-YEAR +1.8 PCT (CONS +1.8 PCT), EXFOOD/ENERGY +1.7 PCT (CONS +1.8 PCT)

NOV HOUSING STARTS +8.9 PCT VS OCT -10.1 PCT (PREV -10.6 PCT)

HOUSING STARTS 574,000 UNIT RATE (CONSENSUS 580,000) VS OCT 527,000 (PREV 529,000)
NOV HOUSING STARTS LARGEST RISE SINCE MAY 2009 (+15.0 PCT)
BUILDING PERMITS +6.0 PCT VS OCT -4.2 PCT (PREV -4.2 PCT)
PERMITS 584,000 UNIT RATE (CONSENSUS 570,000) VS OCT 551,000 (PREV 551,000)
BUILDING PERMITS HIGHEST SINCE NOV 2008 (630,000)
HOUSING COMPLETIONS +8.7 PCT TO 810,000 UNIT RATE VS OCT 745,000

On a related but somewhat off-topic note...BEN BERNANKE WAS NAMED "PERSON OF THE YEAR" BY TIME MAGAZINE.

Put that in your pipe and smoke it Jim Bunning.