U.S. 10-year yield close to 2-month low on fiscal cliff talks

Inflation Watch

The Fed’s preferred measure of inflation expectations, the five-year, five-year forward break-even rate, fell to 2.73 percent on Nov. 13, the most recent figure available in data compiled by Bloomberg, from 2.88 percent on Oct. 31.

Consumer prices increased 2.2 percent in October from the year before, the Labor Department reported yesterday. Inflation, as measured by this gauge, has averaged 2.5 percent over the past decade, after rising to as high as 14.8 percent in 1980.

Applications for jobless benefits climbed by 78,000 to 439,000 last week, the highest level since April 2011, the Labor Department said yesterday.

Israel’s Defense Minister Ehud Barak signaled his nation may escalate its military operations against Gaza, bolstering demand for safety of government debt.

Egypt’s prime minister Hisham Qandil visited Gaza and said the Arab world was united behind Palestinians there, as Israel extended its aerial assault and militant groups kept up their barrage of rockets fired at the Jewish state.

Asset Flows

International purchases of U.S. financial assets plunged in September as confidence grew that Europe was beginning to solve its debt crisis.

Net buying of long-term equities, notes and bonds totaled $3.3 billion during the month, down from net purchases of $90.3 billion in August, the Treasury Department said today in Washington. Economists surveyed by Bloomberg projected net buying of $50 billion of long-term assets, according to the median estimate.

China remained the biggest foreign owner of U.S. Treasuries in September after its holdings rose $300 million to $1.16 trillion, according to the Treasury.

Industrial production in the U.S. unexpectedly declined in October as Hurricane Sandy knocked out power in the Northeast.

Output at factories, mines and utilities dropped 0.4 percent last month after a revised 0.2 percent increase in September that was smaller than previously estimated, Federal Reserve data showed today in Washington. Economists forecast a 0.2 percent gain, according to the Bloomberg survey median. The Fed said the storm cut total production by almost 1 percentage point.

Bloomberg News

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