NEW YORK (Reuters Breakingviews) - On Tuesday, the yield on the benchmark 10-year U.S. Treasury note fell to a record low, and Joe Biden surged in the Democratic presidential race. The two may be indirectly related. The former vice president’s dramatic turnaround shows that, like investors, voters are seeking a safe haven in uncertain times. As a deadly virus spreads in the United States, that’s not surprising. It’s bad news for the current president.
Biden’s stock has risen sharply recently – like the price of those 10-year notes. As recently as last week, Vermont Senator Bernie Sanders was given an almost 50% shot of winning enough support from U.S. Democrats to unambiguously be the party’s candidate for president in 2020, according to data crunchers at FiveThirtyEight. But that has changed. Biden won at least nine of the 14 states that voted on what’s known as Super Tuesday.
So what happened? First, Biden was clearly helped by fellow moderate nominees Pete Buttigieg and Amy Klobuchar dropping out this week. And Democratic voters also rejected Michael Bloomberg – the former New York City mayor and financial-data mogul whose eponymous business competes with Breakingviews parent Thomson Reuters. Bloomberg only managed to nab a victory in American Samoa. Voters seemed to prefer the known Democratic quantity.
Biden also represents a flight to safety. Unlike Sanders, he doesn’t demand government-provided health insurance for all. He has advocated taxing the rich more, but not through a draconian wealth tax, as Sanders and other candidates have proposed. Biden has suggested worrying less about China, and making it easier to repay student debt without simply erasing it. And he poses little risk to Wall Street capitalism. He’s a contrast with President Donald Trump in most respects, but hardly akin to ripping the system up.
True, the Biden surge cannot solely be blamed on virus panic. But this new risk-averse environment should be good for him. Bloomberg has suspended his campaign, so the billionaire’s deep pockets, technical expertise and crackerjack organizational team could now help the Biden campaign capitalize on this momentum. This could leave Trump in a fight against a well-connected Washington insider with a billionaire’s war chest, and a pretty safe set of policies. As global anxiety mounts, that’s a potent combination.
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