Last week was a strong one for risk assets as it became increasingly clear that while highly contagious, the omicron variant is very likely to cause a lower rate of serious disease and death than previous strains of the coronavirus.

Most bond prices fell as the Treasury curve experienced significant bear steepening: 2y yields rose 6bp, 10y yields were up 14bp, and 30y yield finished higher by 21bp.

Credit spreads compressed, particularly in high yield, echoing the move higher in equities.

Commodity prices also moved higher last week, with oil gaining more than $5/barrel.

Economic news was mostly positive:

* Weekly unemployment claims fell below pre-pandemic levels

* Consumer price inflation, while high, was in line with consensus estimates

* U of Michigan consumer sentiment rose in preliminary December data