Tariffs, tariffs and more tariffs.

That’s a preview of what you can expect from financial media coverage in the days ahead.

Donald Trump’s decision to move ahead with steep levies on imports from north and south set the stage for a contentious week defined by abrasive rhetoric, recrimination and, of course, retaliation, as America’s neighbors grapple with a US president seemingly bent on engineering a diplomatic crisis with Canada and an economic crisis in Mexico.

New tariffs also jeopardize an otherwise robust US economy, and indeed Trump’s probably trying to leverage American economic exceptionalism early on, just in case. That is: Although he almost surely believes his own balderdash when it comes to creating a new American “golden age,” anything can happen, so why not start right away, from a position of maximum strength, rather than wait around and risk a trade war when US growth slows or, God forbid, stocks recede from record highs?

With all of that in mind, it’s a big week on the US macro scene. January payrolls is obviously the marquee release, and it’ll come packaged with the final annual benchmark revision. Recall that the BLS’s first pass at that process resulted in an 818,000 reduction to total employment as of March 2024, implying average monthly job creation over the preceding 12 months was maybe 68,000 slower than reported.

That 818,000 figure will likely be lower in the final attempt at this yearly statistical floor routine. Incorporating an expected downward revision to the employment level as of December tied to the birth-death model, the net result’s expected to show average monthly headline payrolls growth was 150,000 last year. That’d be around 30,000 less than the pace implied by the series as it currently stands.

The preliminary revision — i.e., the 818,000 estimate — served to validate the Fed’s dovish pivot in August, as it was released less than three weeks on from a lackluster July jobs report. The US labor market promptly firmed up, so I’m not sure how tradable the final revision will actually be.

Anyway, consensus expects 165,000, give or take, from the January NFP headline. That’d be a deceleration from the prior two months’ (unrevised) prints.

A consensus readout would be (more than) enough to justify the Fed’s wait-and-see approach, which is to say strong enough to keep the Committee on hold pending clarity on trade policy (which clearly isn’t forthcoming unless by “clarity” you mean yes, Trump still loves tariffs) and additional evidence that the US disinflation process is on track following a year of hiccups.

The advance read on Q4 GDP evidenced an American consumer still excited to spend, and although PCE prices were benign in December, US policymakers are concerned about the prospect that underlying inflation resets ~1ppt higher versus pre-pandemic levels, particularly given the read-through of mass deportations for wages.

There’s likely to be some tension between Jerome Powell — who said last week the Fed views US monetary policy as “well-positioned” — and Trump — who, during an abrasive virtual appearance “at” Davos, said he’ll “demand” lower rates “immediately.”

Trump wants rate cuts not just to bolster the US economy, but to prevent the kind of runaway dollar strength that works at cross purposes with his tariffs. Tariffs like the ones he announced over the weekend. But a run-it-hot economy is an economy that’ll tend towards higher inflation outcomes, and higher inflation isn’t compatible with rate cuts. It’s an insanity loop for Trump, and it drove him crazy at various intervals during his first term.

The dollar’s coming off a good week after rare consecutive losses. As the figure reminds you, this is an environment where the greenback’s prone to strength given the growth outcome disparity between the US and the rest of the world, a burgeoning monetary policy divergence predicated on that disparity and voracious demand for US assets, particularly stocks.

All the other first-of-the-month, top-tier US macro releases are due this week as well, including JOLTS (which’ll show there were still around eight million open jobs as of the last business day of December), ADP private hiring (seen at 150,000 for January), the preliminary read on University of Michigan sentiment for February (which’ll be eyed closely for any additional evidence that tariff concerns are feeding into longer run inflation expectations), unit labor costs (accompanied, of course, by the first read on productivity growth for Q4) and ISM manufacturing, which economists expect at 50.0, right on the line between expansion and contraction.

Finally, Treasury’s borrowing estimate and the QRA are due Monday and Wednesday, respectively. Coupons won’t be increasing this time, but at some point later this year, Scott Bessent will need to lift auction sizes. Put differently: Whether the borrowing estimate/QRA ends up being tradable depends on the guidance.

“[A]ttention will be squarely focused on the phrase, ‘Treasury does not anticipate needing to increase nominal coupon or FRN auction sizes for at least the next several quarters,'” BMO’s Ian Lyngen remarked. “If the language is retained, the market will assume that auction size increases will be delayed further into 2025, if not 2026 [but] in the event the language is altered or eliminated, the obvious conclusion would be that auction size increases are coming sooner than previously anticipated.”