This morning, the US Supreme Court ruled 6-3 that the tariffs Trump has imposed are not permitted under the statute that was being used. While this brings a great deal of uncertainty as to how the billions of tariffs already collected will be returned, on first blush the market moved higher, especially those companies who have been most impacted by the higher prices the tariffs and counter tariffs, particularly retailers. Trump has long given assurances that if the court rules against him that he has other legal ways to put the tariffs back on. We are about to find out.
We also got some unsettling economic news this morning. The 4Q25 GDP was forecast to be +2.8% QoQ and came in only 1.4%. The PCE data was expected to rise one tick MoM and came in up 2 ticks. Consumer spending fell QoQ. With all this news on top of the tariff decision, US Treasuries have been relatively quiet, with the US 2-year flat and the 10-year up 1bp. Despite a theoretical easing on inflation pressures that stopping tariffs should bring, bets on Fed cuts moved little, and actually ticked lower for after Powell is replaced. This probably reflects the uncertainty of the moment.
On the commodity front, precious metals are higher, especially silver +5.7%. Crude oil is lower, to $66/bbl after being as high as $67 on rumors of a possible negotiation with Iran. Natural gas and gasoline are flat. The US dollar index is down modestly at 97.6. Crypto has ticked higher with Bitcoin at $67.6K.
Despite a lot of uncertainty of what comes next with tariffs, we’re seeing a relief rally now that the court’s decision has been announced but are likely to see further volatility going forward as the details of how the billions in tariffs already collected will be dealt with and what Trump’s plan “B” is.
