Mixed with positive overtones
The weaker than expected employment situation didn't cause despair among equity investors. Perhaps the equity market has already priced in a mild recession and eroding corporate profits over the next few months. For the most part, equity prices generally headed in an upward direction this past week as more investors realized that bargains were to be found. If economic data surprises on the upside, it is likely that we could see more upward momentum in the stock market. For the most part, though, equity investors expect anemic economic activity to remain in place for several more months. Also keep in mind that this market is skittish and could easily over-react to any news of even alleged terrorist attacks.

Consistent downtrend with Fed's help
In the first two weeks after the terrorist attack, the bond market faced a surge of activity as a safe haven security. But when the federal government started talking about increased expenditures coupled with lower taxes, bond investors worried that the supply of new Treasuries would spurt and hurt prices. But this week, the economy and Fed won out: that is, sluggish economic data coupled with a Fed rate cut moved the Treasury yield curve in the direction of lower rates. If stock prices move decidedly higher, we might see some movement out of the Treasury market and into stocks - which would lift Treasury yields. In the meantime, the predictions of economic recession coupled with expectations of further rate cuts are putting a damper on yields and lifting prices instead.