13 Aug 2010 Bulls Pause to Reconsider
Posted at 14:48h in The Friday BriefThe 10% rally in the S&P 500 beginning in early July abruptly turned this past Tuesday as the Fed announced a small downgrade in their assessment of the recovery and as a Chinese government report suggested growth was slowing in that economy. The US recovery has been largely attributed to exports which will decline if China and the global economy drift back into recession. The three-day decline in stock prices this week erased 3.8% from the 10% rally. Treasuries on the other hand continued their multi-month advance as the Fed said they would replace maturing mortgage bonds held on their books with two to ten-year Treasury bonds. The Barclay’s 7-10 year Treasury index is up 3% since early July.