Index of credit risk declines on strong jobs report

On Friday, the U.S. Department of Labor reported that the unemployment rate dropped to 8.5 percent in December on the addition of 200,000 jobs. That figure is down from a revised 8.7 percent in November. The largely positive report helped drive down a benchmark gauge of U.S. company credit risk for the first time in three days. The Markit CDX North America Investment Grade Index of credit-default swaps, which investors use to gauge losses on corporate debt or to inform credit decisions, fell by 0.6 basis points to reach 119.4. The index typically declines inversely to investor confidence. Credit swaps pay buyers the original value if a debtor fails to meet its repayment obligations. One basis point equals $1,000 annually on a contract protecting $10 million of debt, Bloomberg reports. "This is exciting news," Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi wrote in a report, according to the source. "The economy is putting people back to work." The latest Markit Index reading reflects a slew of recent news suggesting a substantial uptick in  economic activity. As Europe appears to be mired in a recession, U.S. markets are working to cushion themselves from an overseas downturn.