It was a short week in the markets and economic data was sparse. Equity and bond investors remained in a state of uncertainty as vote recounts were the major focus of the week...and we still don't have a presidential victor. The uncertainty is creating negative market psychology. As a result, companies that failed to beat expectations by a wide margin saw their stock prices punished. Moreover, it seemed that whatever industry the offending company was in suffered as a partner in crime. There is a chance for a relief rally in the markets in the next three weeks or so, but then markets will thin out again as the Christmas holidays commence.

All markets are showing declines from year ago levels. Until a few weeks ago, at least the Russell 2000 was maintaining a level closer to where it ended 1999. In the past couple of weeks, it also has suffered from the bearish market sentiment.

Aside from the 2-year note, intermediate and long term rates have edged lower in the past couple of weeks. Treasury securities are benefiting from the most recent deterioration in the stock market. If stock prices run higher in the next couple of weeks, the long end of the Treasury yield curve could head marginally higher.