Stocks continued their rally today as markets reacted to recent news that an effective treatment for COVID-19 might be on the horizon, which would enable to economy to open up at least a little earlier, said CNBC. As of 10:40 a.m. the Dow Jones Industrial Average was up by 343 points. The S&P 500, meanwhile, was up 1.5 percent so far, while the Nasdaq gained 0.9 percent. Among stocks, one particular standout winner so far has been biotech company Gilead, which announced that treatment of COVID-19 patients with its broad-spectrum anti-viral medication remdesivir showed much promise, although it cautioned that trials have been small so far and have not yet confirmed the treatment's effectiveness.

This rally came despite yesterday's dismal unemployment figures, as well as looming bond defaults in the high-yield debt sector. What's more, Reuters is reporting that the number of once-reliable companies having their debt go from investment-grade to junk is the highest it's been since the last global financial crisis, in 2008. Globally, the number of "fallen angels," that is, companies whose debt has been downgraded to junk, went from just two in January to 23, with promises of more on the way. Ford Motor Company is the largest within this esteemed club, according to Bloomberg, having lost its investment-grade status last month, and it now is issuing 10-year bonds at 11 percent interest. The reason it has decided to issue new bonds could be connected to the Federal Reserve's recent announcement that it would now buy even junk bonds as part of its initiative to prop up the flailing credit market. Beyond just making credit harder to access, a company becoming a fallen angel is excluded from certain high-profile investment indexes, usually risk-averse funds, which then further threatens their ability to access capital.

The normally staid municipal bond market, which pays for services such as schools, roads, hospitals and police, is also starting to see significant distress, according to Bloomberg. While these are generally considered a very safe investment because local government entities hardly ever default, analysts are now expecting that municipal defaults will soon begin happening on a wide scale, and that the current stresses are just the beginning. This is because, as with private companies, revenues are falling to the point where entities like transportation authorities, senior living centers, and public-private partnership ventures are having trouble paying their debt obligations.

Transit systems are a good example that illustrate the problem as a whole, as another Bloomberg article notes that they're experiencing particularly acute stress due to the pandemic. Public transportation networks, like New York's own Metropolitan Transportation Authority (MTA), are facing dual shocks to its typical revenue systems. Because of widespread shelter-in-place orders, fare income is now just a fraction of what it was, and because people aren't really shopping, sales tax revenue has slowed down as well. The MTA itself estimates a weekly revenue loss of $142 million during the city’s lockdown.

Previous reporting revealed that traders are nonetheless largely ignoring these other developments, having pretty much written off all of 2020, and are instead looking toward the long-term future, when this crisis has ended. Further, while there is plenty of sturm und drang to go around, it seems to have little relevance to those focused only on what they can buy on the Dow or Nasdaq, because a lot of it is happening outside of companies traded on major securities exchanges.