The shortened holiday trading week got a jolt from the omicron variant as markets adjusted to a potentially changing calculus regarding the pandemic. Stock prices traded sharply lower from the near all-time-high levels seen recently, as oil prices plunged to below $70/barrel. The drop in equity and commodity prices along with increased uncertainty drove Treasury yields down significantly across the curve.
Volatility in markets should remain high as more information becomes available on the new variant and its implications for the global economy. Markets are opening Monday, reversing some of the moves from last week.
This week, U.S. markets get an update on the jobs front, with several economic releases providing a look at the continually improving employment situation. The expectation is for more than 500,000 new jobs to have been added last month, with the unemployment rate declining to 4.5%. Given the higher inflation data of recent weeks, a strong employment picture will increase the likelihood that the Federal Reserve speeds up its tapering plans at the December meeting.
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