Brian Chappatta, Columnist

The Bond Market Sends a Hopeful Message About Omicron

Sharply higher Treasury yields show traders are betting the variant won’t derail the U.S. economic recovery.

January 4, 2022 at 5:59 PM UTC

Brian Chappatta is managing editor of Bloomberg News' leveraged finance and distressed debt teams. He was previously managing editor and team leader of its wealth group. Before that he was a Bloomberg Opinion markets and finance columnist and a bonds reporter for Bloomberg News.

A surge in Covid-19 is not expected to knock the Federal Reserve off course.
Photographer: Timothy A. Clary/AFP/Getty Images

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Bond traders are turning into armchair virologists again.

By just about every measure, the $22.3 trillion U.S. Treasury market has started off 2022 with a huge sell-off. Two-year yields reached the highest since early 2020 on Monday, and five-year yields followed suit on Tuesday, jumping to 1.39% from just 1.26% on Dec. 31. Even the 30-year bond yield soared, climbing above 2% for the first time since November. In the first trading day of the New Year, Treasuries lost almost 1% — a big step toward the first back-to-back annual losses for U.S. government debt in modern history.