By Evelina M. Tainer, Chief Economist, Econoday
4/12/01

Stock prices rallied this week before news on the economy was released. Key indicators, reported Thursday, confirmed last week's employment situation: lackluster activity in March. The stock market rally led to a drop in bond prices as some investment flowed out of the risk-free Treasury market and into stocks again. Ironically, the weaker economic scenario is not prompting economists to predict that the Fed will ease before the next FOMC meeting in mid-May, although the consensus forecast does call for a 50 basis point reduction in the federal funds rate target at that time. Most economists do predict that the federal funds rate target will eventually come down to 4 percent from today's 5 percent level.