Since the beginning of the year if you analyse statistics, there was a slowdown in economic activity and in particular after August, business fell off a cliff. I talked to some people in August and they were still very optimistic about the future and in November they wrote that the revenues are 20 per cent below a year ago.
In other words they totally misread the economic slowdown that was going to take place in the second half and this economic slowdown is actually visible in the performance of bonds in the US. If you look at the stock market between October, early November and today, we are down say plus/minus 10 per cent, depending on the index.
Some indices are actually down from the peak by 20 per cent. But in the bond market, the 10-year US treasury has rallied since early November by 10 per cent. I think we will now consolidate and I am just saying that bond market was beginning to recognise the economic slowdown earlier than the stock market.
