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Market Uncertainty Rises With President's Covid Diagnosis

Yields ended the week only slightly changed while U.S. equities slid Friday morning after President Trump's announcement that he and the first lady both tested positive for Covid.  The news highlighted the fact that new coronavirus cases in the U.S. have been rising since mid-September, topping 40,000 yesterday for the third day in a row.  Bond markets were not immediately impacted by the announcement; however, it adds to the high level of uncertainty just 4.5 weeks prior to the election.  

Markets were also negatively affected by a lackluster monthly payrolls report Friday morning, which indicated that the pace of job growth decelerated significantly in September, falling short of consensus expectations.  Despite the smaller than expected jobs gain, the unemployment rate edged lower to 7.9% as labor market participation dropped to 61.4%.  This level was below all estimates, and reinforces the difficult path ahead for the U.S. labor market to fully recover.

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