Mixed with positive overtones
Stock prices have shown a dramatic recovery in the first month since the September 11 attacks on the World Trade Center and the Pentagon. Investors were generally more optimistic this past week since many of the earnings reports have been coming in above, not below, expectations. Optimism begets more optimism. Even Friday's early alarms were dispelled. By the end of the trading session, the decline in Friday's stock market was relatively mild and the week was by and large a success.

Treasury reversal
Not surprisingly, Treasury yields are rising as investors dip their toes into the equity market once again. Indeed, throughout the week, Treasury prices moved inversely to stock prices. Friday's downward movement in stock prices allowed Treasury yields to dip a bit from the higher levels posted through Thursday. The safe-haven aspect of the Treasury market is less important these days. If the economy does start to show signs of recovery in coming months, then the Fed will no longer need to ease. Most economists who are predicting recession concede that the Fed is likely to move no lower than 2 percent for this cycle. That means only 50 more basis points on the federal funds rate - which could come as separate 25 basis point moves in November and December.