US non-farm payroll figures were the main focus in the economic calendar on Friday as CDS spreads displayed a mild rally late in the European session.

The US Labor Department reported a jobs increase of 175,000 in February which comfortably beat market expectations. This is a significant increase compared with the addition of 113,000 new jobs in January.

Janet Yellen, chair of the US Federal Reserve, last week blamed recent weak data releases on adverse weather conditions. Therefore, today's figures were of particular interest to the wider markets.

Despite the increase in employment, the US unemployment rate increased to only 6.7% in February, a mere 0.1% rise from the previous month.

Credit markets priced the Markit iTraxx Europe index 0.5bps tighter as they approached the London close to trade at 70.9bps. On the other hand, the Markit CDX North America Investment Grade index tightened slightly to trade at 62.2bps.

On the other side of the Atlantic, tension is building up between Ukraine and Russia which is reflected in Ukraine's CDS spread performance today.

Five-year CDS spreads for Ukraine widened 53bps to land at 1131bps, although this level is still tighter than the 1325bps observed more than two weeks ago when violence escalated in its capital Kiev.

Ukraine's interim Prime Minister Arseniy Yatsenyuk has dismissed the validity of a planned referendum to determine whether Crimea should become a part of Russia claiming "no-one in the civilised world will recognise the decision of the so-called referendum".

Russian CDS spreads on the other hand also have widened on the news to trade at 230.5bps (+13.5bps). It appears CDS spreads will continue to experience volatility as we approach March 16, which is the date of the proposed referendum.

Akif Ince, Credit Analyst, Markit

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