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CHANDLER <br />ka t6.F <br />ECONOMIC Rour-40up <br />CONSUMER AND PRODUCER PRICES <br />For November, the economy's headline inflation readings <br />improved from the September energy -price peak. Year - <br />over -year CPI decreased to 3.5% from 4.3%. The favorable <br />trend in core inflation continued as the year -over -year Core <br />CPI (CPI less food and energy) was unchanged at 2.1 %. <br />Core CPI continues to depict a very favorable inflationary <br />environment for the economy. <br />LABOR MARKETS <br />The December non -farm payroll employment report <br />showed a modest increase of 108,000 jobs. In addition the <br />previous two -months were revised higher by 71,000 jobs. <br />This report continued to confirm an underlying, positive <br />growth trend in jobs, as we ended 2005. <br />CREDIT SPREADS MIXED <br />OIL PRICES <br />Oil prices for West Texas Intermediate crude increased by nearly <br />$4 per barrel during the month of December. The price per <br />barrel closed at $61.04 up from $57.32 per barrel for the <br />previous period. Price levels moved higher due to concerns <br />about the possibility of future production cuts by OPEC, <br />expected in early 2006. Consumers also felt more of a pinch at <br />the pumps following a short reprieve of near $3.00 dollar a <br />gallon gas thisyear. <br />THIRD QUARTER ADVANCED GDP <br />The US economy continued to expand strongly during the third <br />quarter of 2005 as the final indication for Q3 2005 Gross <br />Domestic Product (GDP) was reported at 4.1 %, as compared to <br />Q2 2005 GDP reading of 3.3%. Strong consumer spending led <br />the economy's third quarter growth. <br />3-month top -rated commercial paper <br />0.32 <br />0.34 <br />(0.02) <br />2-year AA corporate note <br />0.36 <br />0.33 <br />0.03 <br />5-year AA corporate note <br />0.46 <br />0.44 <br />0.02 <br />5-year Agency note <br />0.43 <br />0.42 <br />0.01 <br />Source: Bloombero <br />As of 12/30105 <br />SUSTAINABLE ECONOMIC GROWTH <br />During the month of <br />December, Spreads <br />were slightly wider in <br />all sectors with the <br />exception of very short <br />corporate paper. <br />Trade Balance <br />(68.9) $Bin OCT 05 <br />(66.0) $Bin SEP 05 <br />(55.6) Bin OCT 04 <br />GDP <br />4.1 % SEP 05 <br />3.3% SEP 05 <br />4.0% SEP 04 <br />Unemployment Rate <br />5.0% NOV 05 <br />5.0% NOV 05 <br />5.4% NOV 04 <br />Prime Rate <br />7.25% DEC 05 <br />7.00% NOV 05 <br />5.25% DEC 04 <br />CRB Index <br />331.83 DEC 05 <br />314.27 NOV 05 <br />283.90 DEC 04 <br />Oil (West Texas Int.) <br />$61.04 DEC 05 <br />$57.32 NOV 05 <br />$43.45 DEC 04 <br />Consumer Price Index (y/o/y) <br />3.5% NOV 05 <br />4.3% OCT 05 <br />3.5% NOV 04 <br />Producer Price Index (y/o/y) <br />4.40% NOV 05 <br />5.90% OCT 05 <br />5.00% NOV 04 <br />Dollar / EURO <br />1.18 DEC 05 <br />1.18 NOV 05 <br />1.36 DEC 04 <br />Source: Bloomberg As of 12130105 <br />® 200S Chandler Asset Management Inc, An Independent Registered Investment Adviser. <br />The information contained herein was obtained from sources we believe to be reliable, but we do not guarantee its accuracy Opinions and forecast; regarding industries, <br />companies, and/or the economy are all subject to change at anytime, based on market and other conditions, and should not be construed as a recommendation. Pagie,3 <br />CHANDLER ASSET MANAGEMENT 0 9255 Towne Centre Drive, Ste 350 9 San Diego. CA 92121 ® 800 317 4747 0 chandlerasset.com <br />