To The Moon

Global investors are holding their breath, preparing for a highly volatile "Super Friday." Tonight, a series of heavyweight events—from macroeconomic data to supreme court rulings and structural adjustments in commodity markets—are set to erupt in quick succession. This cluster of events threatens not only to shatter the recent market calm but also to directly reshape the short-term pricing logic for bonds, stocks, and commodities. First in line is the US December non-farm payrolls report, scheduled for release at 9:30 PM Beijing time on Friday. After weeks of a data vacuum caused by the government shutdown, markets are desperate for this "reliable reading" to recalibrate their assessment of the economy's health. This report will serve as the decisive reference point ahead of the Fed's January policy meeting, directly determining whether the central bank maintains interest rates or continues its pace of cuts. Following closely, market nerves will be stretched thin by a potential ruling from the US Supreme Court on the legality of Trump-era tariffs. A court decision deeming the tariffs illegal would weaken a significant revenue source that has brought the government hundreds of billions of dollars, potentially exacerbating fiscal deficit concerns and pushing up long-term US Treasury yields. Although the Trump administration is expected to seek alternative legal avenues to reinstate most tariffs, short-term market volatility is almost unavoidable. Strategists at JPMorgan Chase noted that eliminating tariffs could "reignite fiscal worries, push up long-term yields, and lead to a steepening yield curve." Simultaneously, commodity markets are facing a "double storm." Beyond the potential for sharp repricing in precious metals triggered by the imminent release of the "Section 232" tariff investigation results, large-scale index rebalancing trades have already commenced, placing unprecedented selling pressure on assets like silver. This barrage of events arrives at a critical juncture. The US Treasury market has been stuck in a narrow trading range for a month, with the 10-year yield fluctuating between 4.1% and 4.2%, marking its tightest monthly range since 2020. For global traders, tonight promises to be sleepless, with market volatility potentially exceptionally fierce under the resonance of multiple catalysts. The non-farm payrolls data act as the "final arbiter" for Fed policy. Bond traders are bracing for volatility tonight, following a month where the US 10-year Treasury yield has been trapped in a narrow band between 4.1% and 4.2%. Zach Griffiths, Head of Investment Grade and Macro Strategy at CreditSights, stated, "The lack of economic data over the past few months has made the market more complacent; we could see volatility pick up." With the effects of the government shutdown fading, this report is seen as the first data point able to reliably reflect economic conditions. Investors widely anticipate the labor market will show signs of stabilization. According to a Bloomberg survey of economists, non-farm payrolls are forecast to increase by 70,000 in December, following a gain of 64,000 in November, while the unemployment rate is expected to dip to 4.5% from 4.6%. Current market pricing indicates investors see only about a 10% chance of a Fed rate cut this month, with the next cut anticipated in June, one month after Fed Chair Powell's term concludes. Gregory Faranello, Head of US Rates Trading and Strategy at AmeriVet Securities, analyzed that a "very weak" jobs report, such as flat employment growth, would force the Fed to intervene, potentially pushing the probability of a January rate cut to 50%. In such a scenario, US Treasury yields would decline across the board, with short-term bonds outperforming long-term bonds, leading to a steepening yield curve. The Supreme Court ruling presents a binary "either/or" choice regarding the tariffs' fate. After digesting the jobs data, market focus will swiftly shift to the potential tariff ruling from the Supreme Court. The outcome has a distinctly binary effect: if tariffs are overturned, stocks are likely to benefit while bonds may come under pressure; if tariffs are upheld, the market reaction would be the opposite. JPMorgan Chase's Delta-One trading desk provided a detailed scenario analysis. The base scenario (66% probability) involves tariffs being overturned and immediately replaced, potentially leading the S&P 500 to gain 0.75%-1% intraday before paring gains to finish up 10-20 basis points. If tariffs are maintained (24% probability), the index could fall 30-50 basis points. The most optimistic scenario (9% probability) sees tariffs overturned and not replaced until after the midterm elections, potentially driving a 1.25%-1.5% index gain, with small-cap stocks significantly outperforming large-caps. Ohsung Kwon, Chief Equity Strategist at Wells Fargo, estimates that if tariffs are ruled illegal, S&P 500 companies' 2026 EBIT could be about 2.4% higher than last year's levels. Consumer staples, industrial manufacturers, and large banks would be the clearest beneficiaries, while materials and commodity sectors might lag due to the loss of price protection. For the bond market, however, the team of strategists at JPMorgan Chase pointed out that eliminating tariffs carries the risk of "reigniting fiscal worries, pushing up long-term yields, and leading to a yield curve steepening," but the overall impact "should be fairly limited" as the Trump administration would likely seek other legal means to restore most tariffs. The Morgan Stanley team cautioned investors to watch for the timing and scale of potential tariff refunds the government might pay to importers, as this directly affects Treasury issuance demand. Prediction platforms indicate bettors see about a 24% chance the court upholds the Trump tariffs, while the probability of immediate tariff revenue refunds is only around 40%. Beyond the macroeconomic drama, commodity markets are confronting more complex micro-structural shocks. The results of the US "Section 232" tariff investigation on critical minerals are expected this Saturday, with markets highly sensitive to the direction of silver, platinum, and palladium. According to analysis from Kenny Hu's research team at Citi, palladium is most likely to face high tariffs (e.g., 50%), which would cause US prices to surge, creating a massive premium over the London market and triggering short-term "rush-to-US" shipments. In contrast, silver is highly likely to be exempt from tariffs. If no tariffs are imposed, metal would flow out of the US to ease spot tightness in London, potentially leading to a price correction for silver. More immediate pressure stems from fund flows. The annual rebalancing of the Bloomberg Commodity Index (BCOM) commenced after the close on January 8th. With silver's weight being significantly reduced, TD Securities and Deutsche Bank anticipate approximately $7.7 billion in silver sell orders will hit the market over the next two weeks, equivalent to about 13% of total COMEX silver open interest. Daniel Ghali, an analyst at TD Securities, warned that in a liquidity vacuum, this could trigger a violent repricing akin to a "blow-up." However, Lina Thomas, an analyst at Goldman Sachs, offered a contrasting view, suggesting that as long as tight London inventories persist and the US supply-demand mismatch continues, extreme price volatility will remain, potentially even increasing further due to investor enthusiasm. She also cautioned, however, that downside risks would increase significantly once London liquidity recovers.