President Trump Tests Positive
10/02/2020
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President Trump tested positive for COVID-19 yesterday. This may create questions about the path to the November 3 elections.
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Something has changed in the pre-election landscape, and we will see if it is enough to move the Senate up and House down, and allow for a fifth phase of COVID-19 relief to finally be finalized.
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The House and White House reported to be closer to a relief agreement on Friday morning. We believe mindsets will need to shift in order for the Senate to get on board with a COVID-19 relief plan that is between $1.6 and $2.2 trillion. As of now, it still seems the Senate is very far apart from anything the House and White House may agree upon. The House session ends today, and the Senate will be in Washington until the end of next week.
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With a last look at monthly labor market data before the election, the U.S. added 661,000 jobs in September, and the unemployment rate fell to 7.9% from 8.4%, according to Bureau of Labor Statistics data reported Friday morning. This number fell short of the market expectation of 859,000. This data point could support the argument that the economic recovery from the COVID-19 shutdowns is slowing.
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The 20 straight weeks of consecutive flows into municipal mutual funds were snapped this week as investors pulled $775 million from municipal funds, per Lipper data reported yesterday. This falling demand comes at an inopportune time as issuers are continuing to blanket the primary calendar with financings. There is $12 billion currently scheduled to come to market during the week of Oct. 5. We have been writing for several weeks about the fact that demand seemed to be slipping. Now, it may be difficult for the market to absorb new-issue activity without yield concessions, especially for non-premium grade type credits.
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New York State and New York City (NYC) were both downgraded by one notch to Aa2 by Moody’s yesterday because of the continuing impact from the COVID-19 shutdowns. The rating agency highlighted that NYC faces a longer road back to normalcy than most other major U.S. cities. The outlook for NYC remains “Negative,” according to Moody’s.
