Equity investors like economic news, not accounting statements
Equity investors are getting more and more nervous about accounting statements. When suspicions of questionable accounting arise, investors sell the company first and ask questions later. The Enron fiasco is making investors more leery about risk factors in the market.

Equity investors were inclined to favor the Fed's inaction at this week's FOMC meeting, in which policy makers left the federal funds rate unchanged at 1.75 percent. While investors realize conditions are anemic and economic risks remain, the inaction means that the economy -- and the outlook for corporate profits -- may be turning the corner.

Treasury yields decline despite no rate cut
In contrast, bond market players were not at all pleased with the Fed's decision. Bond players were also bombarded with economic indicators that surprised on the upside. Friday's employment report showed a decrease in the nation's jobless rate, not the increase that was expected. But nonfarm payrolls did decline sufficiently for the bond market to concur that the economy was still in recession during January.

After all was said and done, Treasury yields did decrease moderately this week relative to a week ago. Nonetheless, the spreads relative to the fed funds rate are still rather wide and suggest that bond market participants still are looking for a rate hike by the Fed in the near term. In contrast, the majority of economists have the Fed on hold for several months.

Next week will see very few economic indicators. Treasury market players are focused on the 5 and 10-year note auctions.