Bond traders face a volatile day as US jobs report and Supreme Court tariff ruling loom

Traders are watching for December payrolls due at 8:30 a.m. Washington time and a possible mid-morning Supreme Court opinion on President Trump’s tariffs, both events that could move the Treasury market.

Bond traders are preparing for an active Friday as the December US jobs report is scheduled and a possible Supreme Court decision on presidential tariffs may follow. The employment figures are expected to provide a clearer reading after recent data were affected by the government shutdown. A court opinion against the tariffs, which have generated substantial revenue and eased deficit pressure, is seen as a notable uncertainty for Treasuries. The benchmark 10-year yield has traded in a narrow range recently ahead of these events. Key facts: - The December employment report is due at 8:30 a.m. Washington time; Bloomberg’s survey of economists forecast a 70,000 payrolls gain and an unemployment rate near 4.5%. - A possible Supreme Court opinion on the legality of the president’s tariffs could appear mid-morning and is described by market participants as a significant unknown for Treasuries. - The US government-debt market referenced is about $30 trillion, with the 10-year yield recently fluctuating around 4.1% to 4.2%. - Treasuries rose more than 6% last year as a cooling labor market contributed to three quarter-point rate cuts by the Federal Reserve. - Investors place roughly a 10% chance on a Fed cut this month and are pricing the next reduction for June, with another easing expected later in the year. - Some traders and analysts say a much weaker payrolls print could raise the probability of a January easing to about 50%. Summary: The jobs report and a potential Supreme Court ruling on tariffs together create the conditions for increased volatility in the Treasury market after a period of relative calm. Market participants will watch the 8:30 a.m. payrolls release and any mid-morning court opinion closely, with the Federal Reserve’s Jan. 27-28 meeting remaining the next major policy event.