Markets Face First Major Test: Jobs Data and Tariff Ruling Could Trigger Volatility

• December jobs report expected to show 73,000 new jobs (up from November's 64,000) with unemployment forecast to ease from 4.6% to 4.5%; stronger data could reduce Fed rate cut expectations while weaker numbers may trigger growth concerns.
• Supreme Court designated Friday as an opinion day for tariff ruling, with prediction markets assigning only 24% chance of upholding Trump's tariffs; a strike-down could weaken the U.S. dollar and steepen the Treasury yield curve.
• The CBOE Volatility Index has risen to 15.5 despite firm equities, signaling an unusual divergence that suggests investors expect renewed volatility ahead, with strategists describing the current market calm as 'a little too quiet.'

Market Summary: Jobs Data and Tariff Ruling Pose Volatility Risk

Key Events

Financial markets face two critical catalysts on Friday, January 9, 2026: the December jobs report and a potential Supreme Court ruling on President Trump's tariffs. Despite U.S. equities reaching new all-time highs this week, analysts warn the current calm may be fragile.

Employment Data Expectations

Economists forecast 73,000 new jobs for December, up from November's 64,000. Unemployment is expected to ease from 4.6% to 4.5%. A stronger-than-expected report could reduce expectations for multiple Fed rate cuts, potentially halting the market rally. Conversely, weak numbers could raise concerns about economic growth and elevated valuations.

Tariff Decision

The Supreme Court designated Friday as an opinion day for a ruling on Trump's tariffs imposed under the International Emergency Economic Powers Act. Polymarket assigns only a 24% probability the Court will uphold the tariffs. If struck down, analysts expect U.S. Dollar weakness and Treasury yield curve steepening, potentially strengthening the case for Fed rate cuts. If upheld, risk assets could benefit as tariffs provide revenue for deficit reduction.

Market Signals

The CBOE Volatility Index (VIX) has risen to 15.5 despite firm equities—an unusual divergence suggesting investors expect heightened volatility. Options pricing indicates traders are preparing for a roughly 0.9% move in the S&P 500 in either direction.

Sector Rotation

Market leadership shifted this week from technology to energy, banking, and healthcare, though without triggering elevated volatility—a response analysts describe as "too quiet."

Implications

Elevated valuations, uncertain government policies, and shifting Fed expectations heighten risks across equities, bonds, currencies, and retail sectors.