By now, most everyone has heard that the president was diagnosed with covid overnight.  At  face value, this seems like it should be very big news for financial markets.  At a minimum, this has the potential to alter the schedule/venue of the next presidential debate.  And of course more dire outcomes carry more significant consequences.  One would expect a very big, very fast "de-risking" on both sides of the market.

Sure enough, stocks and bond yields fell fairly quickly on the initial news, but  not by nearly as much as you might expect.  Moreover, the recent past includes several examples of stimulus-related headlines doing even more to move the market.  Simply put, the Trump covid news wasn't even able to erase the stimulus-inspired rally from Wednesday.

Even more interesting than the relatively smaller drop in stocks overnight is the almost imperceptible drop in 10yr Treasury yields.  This is an unabashed sign of the times--evidence of the extremely high bar that any potential market mover would need to clear in the post covid era. 

It's not an overstatement to say that no recent headline or econ data (or even the Fed announcement) has even come close to prompting a range breakout for bonds.  The best we've been able to do is track even narrower ranges within the broader ranges.  To that end, the current order of the day is to err on the side of caution as the consolidation pattern of the past few weeks resulted in a break toward higher yields.  The implication is for a test of the 0.72-0.73 ceiling which we may have already seen yesterday.  Unfortunately, yields just now bounced at the scene of the breakout from yesterday (marked on the chart below). 

All other things being equal, this is more of a negative sign than a neutral one.  But all we can do is remain on the lookout for another challenge of 0.72-.073 and upgrade our level of defensiveness if it breaks.  Conversely, if bonds shake off today's early weakness to end the day in positive territory, we'll then have enough reinforcement of the sideways range to include the phrase "business as usual" in our rate-watching thesis--something that seems fairly amazing given Trump's covid diagnosis.