July 20 (Bloomberg) — The index of U.S. leading indicators rose in June for a third consecutive month, reinforcing signs the economy may be emerging from the worst recession in five decades.

We are going to pull forward an argument that we did on yesterday’s third page to start things off today. We thought the topic deserved a second mention.

The National Bureau of Economic Research (NBER) marks the start and end of recessions- typically with the benefit of a considerable amount of hind sight. In July of 2003, for example, the NBER asserted that the previous recession had ended in November of 2001 so it will be some time before the end the current recession is officially acknowledged.

In any event the top three charts at right show the U.S.. 30-year T-Bond futures. Vertical lines on the charts mark the start of the month that the NBER marked as the last month of the 1981- 82 recession, the 1990- 1991 recession, and 2000- 2001 recession.

The first point is that leading up to the end of the last three recessions the bond market was rising in price. Long-term interest rates declined steadily for four or five months until the pace of economic activity hit bottom and began to recover.

The second point would be that on the two occasions- 1982 and 2001- when the recession ended in November the T-Bond futures traded down below the moving average lines during the June and July time frame.

The current situation is shown below right. Notice that the bond market has not been rising in price since the end of last year so if the low point for economic activity occurs at a short to medium-term bond price peak then one of two outcomes seems likely. Either the recession ended at the end of 2008 or it is more likely to end closer to the conclusion of this year.

The TBond futures are currently below the moving average lines in a manner somewhat similar to the autumn of 1990. If the TBonds continue to work downward in price breaking the June lows just below 114 then the recession ended last year. If, on the other hand, the TBonds resolve back above roughly 122- 123 next month then we would expect to see bond prices continue to trend higher all the way through October and into November.

Equity/Bond Markets

We are going to pull forward an argument that we did on yesterday’s third page to start things off today. We thought the topic deserved a second mention.

The National Bureau of Economic Research (NBER) marks the start and end of recessions- typically with the benefit of a considerable amount of hind sight. In July of 2003, for example, the NBER asserted that the previous recession had ended in November of 2001 so it will be some time before the end the current recession is officially acknowledged.

In any event the three charts below show the U.S.. 30-year T-Bond futures. Vertical lines on the charts mark the start of the month that the NBER marked as the last month of the 1981- 82 recession, the 1990- 1991 recession, and 2000- 2001 recession.

The first point is that leading up to the end of the last three recessions the bond market was rising in price. Long-term interest rates declined steadily for four or five months until the pace of economic activity hit bottom and began to recover.

The second point would be that on the two occasions- 1982 and 2001- when the recession ended in November the T-Bond futures traded down below the moving average lines during the June and July time frame.

The current situation is shown below. Notice that the bond market has not been rising in price since the end of last year so if the low point for economic activity occurs at a short to medium-term bond price peak then one of two outcomes seems likely. Either the recession ended at the end of 2008 or it is more likely to end closer to the conclusion of this year.

The TBond futures are currently below the moving average lines in a manner somewhat similar to the autumn of 1990. If the TBonds continue to work downward in price breaking the June lows just below 114 then the recession ended last year. If, on the other hand, the TBonds resolve back above roughly 122- 123 next month then we would expect to see bond prices continue to trend higher all the way through October and into November.