Bonds may portend year-end recovery

Trends in five-year Treasury bonds suggest the economy will be recovering from its slump within nine months, according to Bloomberg.

The five-year Treasury and its relationship to other Treasuries was an indicator of recovery from recessions in 1990 and 2001.

In recent days, the five-year Treasury has fallen to its lowest level since 2001 compared with the average of two-year and 10-year Treasuries.

If past patterns hold true, the economy should be moving ahead within six to nine months, James Caron, Morgan Stanley’s head of U.S. interest rate strategy, told Bloomberg.

Driving the recovery will be interest rate cuts by the Federal Reserve Bank and a plan by President Bush W. Bush and Congress to stimulate the economy with a $168 billion package, Bloomberg reported.

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