US Economic Data Continue To Weaken
Erik McCurdy | Jul 24, 2012 07:04AM ET
In March, our analysis of leading economic data indicated that the development of a recession remained likely and we expected the data flow to begin weakening. As anticipated, the deterioration was gradual at first, before accelerating during the last two months.
As shown on the following graph from the latest PIMCO . Although the stock market continues to live in denial of this likely outcome, the treasury markets do not. For example, the 10-year Treasury note yield has been trending sharply lower for the past four months and today it opened at a new low for the secular bear market from the early 1980s.
Our Cyclical Trend Score (CTS) issued a long-term sell signal for stocks in early April and it remains likely that a new cyclical bear market has begun.
As always, it is important to remember that a long-term top is a process, not an event. Cyclical highs are confirmed by a series of breakdowns, the next of which could occur during the next several sessions. Therefore, it will be important to continue monitoring market behavior closely.
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