The Bottom Line

In contrast to the past few weeks, economic data grabbed the attention of equity and bond investors. Though there was lots of reaction to the data, the moves were largely predictable. That is, the stronger-than-expected retail sales figures lifted stocks but depressed bond prices. Less robust economic data later in the week didn’t really hurt the equity market but did allow bond prices to drift up from Tuesday's lows – until the international trade figures implied an upward revision to first quarter GDP growth.

On the whole, the economic data still point to a recovery, albeit a moderately paced one. Equity and bond investors had gotten ahead of themselves earlier in the year, leading to the rout earlier this month. This week’s market price levels are more in tune with economic fundamentals.