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<br />ECONOMIC ROUNDUP <br /> <br />~ I CHANDLER <br />... I :..mMENf <br /> <br />CONSUMER AND PRODUCER PRICES <br />During August, the economy's headline inflation readings <br />continued to ease as the year-aver-year C PI decreased to <br />3.8% from 4.1 %. However, the year-over-year Core CPI <br />(CPlless food and energy) increased 0.1 % to 2.8%. This is <br />the fifth month in a row of higher Core CPI and the highest <br />reading since November 2001. The divergence of the near- <br />term trends in headline CPI and Core CPI makes it difficult <br />to determine which inflationary measure will exert more <br />influence on the economy. <br /> <br />OIL PRICES <br />Oil prices for West Texas Intermediate declined in <br />September. The price per barrel closed the month at $62.91 <br />down from $70.26 per barrel. Price levels moderated as <br />supply disruption concerns related to Middle East political <br />tensions and the Atlantic hurricane season eased. <br /> <br />CREDIT SPREADS MIXED <br /> <br />LABOR MARKETS <br />The September non-farm payroll employment report showed a <br />smaller than expected increase of 51,000 jobs. However the <br />previous month's report was revised higher by 60,000 jobs. <br />Currently, the six-month average for non.farm payroll <br />employment is 118,000 jobs. September's report confirms a <br />continued moderation of the growth trend in the labor markets. <br /> <br />HOUSING STARTS <br />Single-family housing starts were 1.36 million in August. the <br />lowest in three years. Since the recent peak in January 2006, <br />single-family starts are down 25%. Some financial market <br />forecasts currently estimate that the slowdown in housing could <br />reduce Gross Domestic Product by 0.5% to 1.0% over the next <br />several quarters. <br /> <br />SRreaU to One Month <br />CREDIT SPREADS Treasuries (ty"Q) Ago (%) Change <br /> <br />3-month top-rated commercial paper 0.33 <br />2-year AA corporate note 0.34 <br />5-year AA corporate note 0.49 <br />5-year Agency note 0.34 <br /> <br />0.19 0.14 <br />0.39 (0.05) <br />0.56 (0.07) <br />0.35 (0.01) <br /> Data as of 9/30/06 <br /> <br />Source: Bloomberg <br /> <br />MIXED ECONOMIC DATA <br /> <br />j. . <br /> <br />ECONOMIC INDICATOR Current Release Prior Release One Year Ago <br /> <br />Trade Balance (68.0) $Bln JUL 06 (64.8) $Bln JUN 06 (58.0) $Bln JUL 05 <br />GDP 2.6% JUN 06 5.6% MAR 06 3.3% JUN 05 <br />Unemployment Rate 4.6% SEP 06 4.7% AUG 06 5.1 % SEP 05 <br />Prime Rate 8.25% SEP 06 8.25% AUG 06 6.75% SEP 05 <br />C RB Index 305.58 SEP 06 329.02 AUG 06 332.97 SEP 05 <br />Oil (West Texas Int.) $62.91 SEP 06 $70.26 AUG 06 $66.24 SEP 05 <br />Consumer Price Index (y/o/y) 3.8% AUG 06 4.1 % JUL 06 3.6% AUG 05 <br />Producer Price Index (y/o/y) 3.7% AUG 06 4.2% JUL 06 5.3% AUG 05 <br />Dollar / EURO 1.27 SEP 06 1.28 AUG 06 1.20 SEP 05 <br />Source.- Bloomberg <br /> <br />@ 2006 Chandler Asset Management, Inc, An Independent Registered Investment Advise, <br />The information contained herein was obtained from sources we believe to be reliable. but we do not guarantee its accuracy Opinions and forecasts regarding industries. <br />companies, and/or the economy are all subject to change at any time, based on market and other conditions. and should not be construed as a recommendation. <br /> <br />Page J <br /> <br />CHANDLER ASSET MANAGEMENT · 9255 Towne Centre Drive, Ste 350 · San Diego. CA 92121 · 800 3174747 · c;handlerasset.com <br />