Volatile Week Ends as Yields Plummet Across the Curve

Yields plummet on weak payrolls number to end volatile week. Swap rates and Treasury yields initially sold off on today’s closely watched jobs report, but quickly reversed course, the long end of the curve declining over ~10 basis points on the day. The 10-year Treasury yield would ultimately close at 1.34%, its lowest level since late September and nearly 20 basis points below where it started the month.

Headline jobs growth misses for November, but jobless rate falls. U.S. job growth saw its smallest gain of the year in November with 210,000 jobs added, missing economists’ estimate of 550,000. However, the report was mixed as the household survey showed employment increasing with a 1.1 million gain. The impressive household numbers sent the unemployment rate down to 4.2%, lower than economist estimates of 4.5%, and increased the labor participation rate to 61.8%.  Future job growth could be constrained if the new omicron COVID variant continues to spread and lead to new round of restrictions.

Eight U.S. states have confirmed omicron cases as market volatility hits the highest level since January. The omicron variant is spreading rapidly throughout the globe as 38 countries have reported cases of the variant. The World Health Organization has said no deaths have been reported due to the omicron strain yet. In an interview today, Dr. Anthony Fauci said it was too early to tell how omicron would spread in the U.S. and if it could overtake the delta variant as the dominant variant in the U.S. The spread of the new strain has nonetheless brought a new wave of volatility to the markets with the VIX, an index that tracks market volatility, hitting its highest level since the beginning of the year.