The New York Empire State manufacturing index exploded to a record high 41 in November from 34.1, sparking upward forecast revisions of other upcoming manufacturing indicators. Business inventories also gained 0.3%, though sales still outpaced them at +0.6%, leaving the inventory/sales ratio at 1.36 months. The dollar recovered after profit-taking prevailed on gold and commodity bloc currencies.
The December bond closed 13/32 higher at 110-22, while the 2-year note and 30-year bond spread steepened 2 basis points to +326 basis points -- thanks to reflationary Fed policy, weaker stocks, and the "safety" bid. Treasury's Snow covered a wide array of subjects ranging from China to tax and budget policiec. The budget gap grew to -$69.5 billion in October, from +26.4 billion.