Another week, another set of companies
Stock prices improved through most of the week. Wednesday's retail sales figures, which were particularly bullish for the equity markets, and Thursday's jobless claims helped push the Dow Jones Industrial Average briefly above the 10,000 mark. Economic news was slightly less bullish on Friday, but the market could have held if it wasn't for bad press on such companies as IBM, Nvidia, Quest, Worldcom and Revlon. Whether accounting irregularities or management shake-ups, investors are becoming more concerned that financial statements can't be trusted.

Recovery not quick enough for bond investors
Perception is everything. We depicted an economic environment that was showing signs of improvement this week. Yet bond investors had expected that the economy would rebound in a more spectacular fashion. As a result, bond prices rose (and yields fell) on Friday as Treasury players decided that a modest decline in production coupled with the modest decrease in consumer sentiment meant that the recovery wasn't on fire after all. After all was said and done, though, Treasury yields weren't all that different from last week.

A few pieces of economic data might move markets one way or the other next week (housing starts, CPI, jobless claims, Philadelphia Fed survey), but bond prices are likely to focus most on the continued turmoil in the equity market. As long as equity prices are aversely affected by accounting discrepancies, more investors will take refuge in the Treasury market as a safe-haven. In addition, bond investors will start wondering what Fed chairman Alan Greenspan will say at the House Committee on Financial Services on February 27.