(Bloomberg) — Treasury yields marched higher with stocks and crude oil Monday as traders deemed Friday’s tumble went too far, amid reports the omicron variant could be less dangerous than the delta mutation.

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The benchmark 10-year yield jumped as much as 7 basis points to 1.54%. That unwound some of Friday’s 16 basis point plunge — the steepest since March 2020. U.S. equity futures climbed, with contracts on the Nasdaq 100 regaining more than half the Nov. 26 losses, while oil rebounded more than 5%.

South African health experts, including the doctor who first sounded the alarm about the omicron variant, indicated that symptoms linked to the coronavirus strain have been mild so far. While the World Health Organization urged caution, steady gains for many risk assets Monday suggested traders were reconsidering their worst-case scenarios for the new mutation.

“The ‘shoot first, question later’ reflex on Friday has abated at the margin,” said Vishnu Varathan, head of economics and strategy at Mizuho Bank in Singapore. “Essentially, this is the morning after where passions are tempered, although caution is not completely dispensed with.”

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Traders retained their slightly diminished expectations for Federal Reserve tightening as the mutation spurred uncertainty about the economic outlook. Futures signal the first rate hike may not happen until July next year, compared with last Wednesday’s pricing which saw traders plump for June.

The 5-year Treasury yield jumped as much as 8 basis points to 1.24%, shrinking the gap to 30-year rates by 2 basis points.

Dip Buyers

There was evidence of some dip buying in Asia, where stock benchmarks pared earlier losses. Friday’s turmoil was likely exacerbated by the virus news breaking at an illiquid time in markets thanks to a U.S. holiday.

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“The Treasuries rally on Friday may have been a little overdone in thinner than usual conditions post-Thanksgiving,” said Su-Lin Ong, head of Australian economic and fixed-income strategy at Royal Bank of Canada. “It would be premature to assume the absolute worst.”

Monday’s increase in yields also helped push the dollar higher against the yen, euro and Swiss franc. And oil’s rebound helped risk currencies strengthen, especially commodity-linked ones like the Mexican peso, South African rand and Australian dollar.

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