The fear of an impending recession dominated trade on Wall Street last week, with bond prices rising and stock and oil prices falling.

The iShares of 20+ Year Treasury Bond ETF rose 4.5% for the week. Higher bond prices drove yields lower, with the benchmark 10-year Treasury bond dropping below 3%, the lowest level since May. The S&P 500 lost 3.1%, while the Crude Oil August contract fell 2.2%.

Traders and investors were spooked by macroeconomic data showing that the world's largest economy may already be in a recession. For instance, the ISM manufacturing new orders index dropped to 49.4 in June from 55.1 in May. A number below 50 indicates that manufacturing orders are contracting.

Then there's gross domestic product, the broadest measure of what the economy produces in a calendar year. The GDP dropped at an annual rate of 1.6% in the first quarter of 2022 due to a shortfall in consumer spending, which accounts for nearly two-thirds of GDP.

Consumers have been cutting back on discretionary items to cope with soaring food, energy, and shelter costs. And this situation is likely to continue in the second quarter of 2002, with the growth in personal consumption expenditure dropping to 0.2% in May from 0.6% in April, well-below market expectations. Another negative GDP report will confirm that the economy is officially in recession.

That's a good thing for fixed-income securities like bonds. Recessions help lower inflation and interest rates, rewarding investors locked in higher rates. But they are bad for stocks, hurting corporate sales and profits. Also, recessions are terrible for oil and commodities in general, as they destroy demand. Thus, the rally in bonds and the selling off in stocks and oil.

But how severe would the recession be? Have markets discounted it? Hard to say, as investor expectations vary.

"The market faces a modern battle between investors convinced we are in a deepening recession driving the market far lower versus others expecting a bear market rally based on oversold conditions and earnings that may not reveal as bad as expected," Patriarch Equity CEO Eric Schiffer told International Business Times. "Oil reveals recessionary fears despite a significant shortage and will face pressure until the Fed shows daylight on easing."

Eric Kuby, chief investment officer at North Star Investment Management, is encouraged by the decline in the oil prices, which eventually could be bullish for stocks.

"In the last few weeks, the encouraging trend of a double-digit fall in oil prices is cause for optimism," Kuby told IBT.

"Historically economic productivity tends to be tied to energy prices & therefore the markets' growth is inversely related to that trend. Assuming market trends follow a continued decline in price, we can expect to see an allaying in investor concern with a subsequent rebound in the stock market."

Kuby's forecast depends on macroeconomic data, like the employment numbers, which will be released Friday.