Markets face two high-risk events today: the release of U.S. December Non-Farm Payrolls later tonight, and a potentially simultaneous Supreme Court ruling on the legality of Trump-era tariffs. Either outcome could break the low-volatility regime that has dominated U.S. Treasury yields over the past month and directly influence expectations for the Federal Reserve’s January meeting.
On the labor side, consensus expects roughly 70,000 jobs added and the unemployment rate edging down to 4.5%. If the data confirms labor conditions are merely “stable rather than strengthening,” it would reinforce expectations for the Fed to remain on hold in the near term. However, a meaningful downside surprise could quickly revive bets on an earlier rate cut, with short-term yields likely falling faster than the long end—steepening the yield curve once again.
Regarding tariffs, a Supreme Court decision overturning Trump-era trade measures would force markets to reassess future fiscal deficits and Treasury issuance pressures, creating structural headwinds for long-duration bonds. While policymakers may seek alternative legal channels to maintain tariffs, near-term uncertainty alone is sufficient to amplify volatility.
Bitunix Analyst View:
U.S. Treasuries are currently priced in a “low-volatility, high-complacency” state. The combination of NFP and a tariff ruling represents a classic event-risk setup. In the short term, investors should watch for directional yield breakouts; over the medium term, the key question is whether policy outcomes materially shift the balance between fiscal and monetary dynamics—reshaping USD trends and risk-asset pricing in tandem.
