Even the 2 Year Treasury yield has come down to record lows as the bond market begins to price in an economic slowdown and the potential for deflation to set it in. At this point, perhaps it is too much too soon. Markets (including bond yields) never go up or down in a straight line. But since April, our line in the sand was drawn as we watched investors run for the safety of the bond market. This line in the sand was drawn at the 3.10% level. As we can see from the chart above, the line in the sand has been breached.

At these levels, the bond market has discounted little fear of inflation. The gold bugs have been pounding the table for years about the coming inflationary crisis that will be fueled by the printing of money by the world's central banks.

From the most recent data from the US Federal Reserve and the European Central Bank (ECB) it would seem that all of the monetary grease that they have put into the economy is not making its way into the economy - and this will be the case so long as the banking system globally is not running at optimal efficiency.

It is hard to argue inflation when US GDP numbers are being revised lower (not higher) for the last two quarters, Europe is undergoing spending cuts and tax increases, and even the Canadian economy has seemingly hit a rough patch for the month of April - surprising many an economist. Yet if they would bother to pay attention to the bond market (above chart), an economic deceleration has been slowly getting priced in.

However, that slowdown scenario does not presage yet another recession or double dip. A double dip recession is an infrequent occurrence - happening only once since the Great Depression. However, for many individuals looking to recover from the last recession or to get back into the labor force, the words "double dip" or "economic slowdown" are just semantics - the impact is real.