A diversity of economic outlooks hit the screens, with no less than the Fed, White House, and surveys from the National Association for Business Economics (NABE) and Morgan Stanley Dean Witter muddying the forecasting waters. Chicago Fed's Moskow painted a tepid second half recovery picture, but with stimulus in the pipeline likely sufficient to avoid recession. In a Q2 NABE survey, participating economists largely concluded the same, amid a bearish historical view of business spending. Morgan Stanley strategist Stephen Roach pondered the risks that the economy does not respond to stimulus. Indeed, May consumer credit stumbled to $6.5 billion from $13.7 billion. Guarded stocks rose ahead of Motorola earnings midweek.
Markets & Finance
Bonds Post Gains
The bond got some of its own back Monday after underperforming against the bullish front-end following Friday's payrolls. Light curve flattening dominated the session, with pockets of dealer bond buying at the beginning of the session setting the tone for the day. The 2s/30s yield spread narrowed back below +160 basis points to +157 basis points as a result and the September bond closed +16/32 at 100-28 after wading into a potent chart area just below the 101-handle.