10-Year Eyes 2.0% After Blockbuster Jobs Report

10-Year hits yet another post-pandemic high, 2% within reach. One more day like today, and the 10-year Treasury yield could hit 2%. It seems almost inevitable, at least in the aftermath of a two-day move that has seen the benchmark rise by 13 basis points. Nonfarm payrolls were the culprit this time, which beat estimates and then some. The 10-year ultimately would close at 1.91% while 5-year rates ended the session at 1.77%.

January jobs data trounces estimates. Omicron was no match for employers growing payrolls in January with U.S. nonfarm payrolls increasing 467,000 in January compared to estimates of 125,000. Further strengthening the data was an upward revision of December’s data to 510,000, up from 211,000.

U.S. credit markets begin to show stress. The U.S. credit markets seemed to be immune to the effects of the explosive increase in rates this year until this week. The cost associated with credit-default swaps (CDS) to hedge against U.S. bank defaults rose again today for the third straight day. CDS indices have widened to 18-month highs today as the strong payrolls data increased the probability the Fed will move faster on hiking rates.