Fixed income markets were whipsawed by trade news and economic data this week, as the 5-year Treasury traversed a yield range of 1.52% to 1.70% before ending the week at 1.66%. Yields were pressured early in the week as the Trump administration announced plans to move forward with Chinese tariffs while also threatening additional levies on France. That pushed yields to their weekly lows.
The subsequent recovery in yields was given a boost on Friday, as the monthly payrolls report significantly outpaced expectations. The November monthly jobs data showed a 266,000 jump in payrolls while October's initial 128,000 payroll gain was revised higher by nearly 30,000. The unemployment rate fell to 3.5% while wage inflation rose, with average hourly earnings rising at a 3.1% pace. The release reinforces previous data indicating that the near-term risk of a recession has abated.