The Chicago Fed said today that April's Activity Index showed an increased probability of recession, although it's doubtful we're in one at present. The index is a three-month moving average based on 85 weighted economic indicators. The manufacturing sector continues to be the major source of the weakness, along with increasing unemployment. The April figure was the lowest since last July when the economy began its decline and was the 10th straight month the index was below zero, indicating below- trend growth. This coincides with earlier data showing a slowing in the housing market as job layoffs and declining consumer confidence take their toll.
Some analysts expect the market to pick up during the last half of the year.
Treasuries were strong due to month-end buying and also the aforementioned economic data keeping hopes alive that the Fed will continue to slash rates. For Tomorrow Let's hope that the bond's strength today doesn't foretell the release of an ugly employment report tomorrow before the open. The NAPM Index data will also be out. Expectations for the NAPM are already a bit pessimistic due to recent decreases in both the Chicago PMI and the Philly Fed index. As such, investors should be wary.