Treasury yields edge lower after Trump tests positive for coronavirus

“The news of the President’s testing complicates an already uncertain election season with just over a month to go. Volatility was already picking up before this news. Downside risk far outweighing,” said Gregory Faranello, head of U.S. rates at AmeriVet Securities.

U.S. Treasury yields slipped early Friday after news that President Donald Trump was diagnosed with the COVID-19 disease.

Investors also parsed a weaker than expected September employment report from the U.S. Labor Department.

What are Treasurys doing?

The 10-year Treasury note yield TMUBMUSD10Y, 0.689% fell 1.6 basis points to 0.661%, while the 2-year note rate TMUBMUSD02Y, 0.132% down 0.6 basis point to 0.125%. The 30-year bond yield TMUBMUSD30Y, 1.474% slid 1.5 basis points to 1.440%. Bond prices move inversely to yields.

What’s driving Treasurys?

President Donald Trump said he tested positive for the coronavirus after his aide Hope Hicks had also tested positive for the disease. Trump will now enter quarantine, creating fresh uncertainty over the race for the White House in November against Democratic candidate Joe Biden.

Stocks opened lower amid the increased political jitters. The S&P 500 SPX, -0.82% and Dow Jones Industrial Average DJIA, -0.83% were down over 1%.

The development has shifted the focus away from economic data that was expected to command market participants’ attention.

The U.S. Labor Department said the economy created 661,000 new jobs in September and the unemployment rate fell again to 7.9% to the lowest level during the pandemic. Economists had forecast 800,000 job gains down from August’s increase of 1.371 million.

In other data, the University of Michigan’s consumer sentiment index for last month will be published at 10 a.m.

What did market participants’ say?

Trump’s positive test for COVID-19 is “not going to have a drastic direction on interest-rate markets. Even though it’s directionally going risk-off, the reaction has been very muted. There’s not a lot of people who want to go long or short Treasurys,” said Patrick Leary, chief market strategist at Incapital, in an interview.

“The news of the President’s testing complicates an already uncertain election season with just over a month to go. Volatility was already picking up before this news. Downside risk far outweighing,” said Gregory Faranello, head of U.S. rates at AmeriVet Securities.