Worst construction drop since 9/11 ... Ugly ISM data ... and more

We got another pair of lousy economic reports this morning -- the Institute for Supply Management's manufacturing index dropped to 49.5 in November from 51.2 in October. We haven't seen a reading below 50, indicating a contraction in the sector, since April 2003 (right after the Iraq War began). Moreover, construction spending dropped 1% in the month of October. We haven't seen a monthly decline of that magnitude since -- get this -- the month of 9/11, when it was also a 1% drop.

We all know housing stinks, so it's no surprise that residential construction spending fell 1.9%. But what I find interesting is that NONRESIDENTIAL spending is also slipping. There was no change in nonresidential spending in October, and a 0.2% drop in September. As recently as this summer, we were seeing consistent monthly gains over 1%.

The market reaction: More of the same -- the dollar is getting pounded (and euro-ed, and yen-ed), with the Dollar Index recently down 29 basis points. Ten-year Treasury yields are down by just over 3 basis points.