The market finally begins to face reality

The first major data release of 2026:
- US December non-farm payrolls increased by 50,000 (market expectation: 70,000; previous: 64,000)
- Unemployment rate at 4.4% (market expectation: 4.5%; previous: 4.6%)
- US October and November non-farm payrolls revised downward by 76,000 — this is not a "mild cooling," but a confirmation of the trend
This data has awakened investors who had just fallen asleep. Over the past month, the market has been almost "asleep," especially the US Treasury market. The 10-year US Treasury yield has been tightly held between 4.1% and 4.2%, with traders bored to the point of trading air. Not because there is no risk, but because — no data, no judgment, no stimulus.
First, looking at the data itself, there is good and bad: the unemployment rate is slightly below expectations, but non-farm payrolls fell short. However, the downward revision of October and November non-farm payrolls broke the balance and confirmed the deterioration of the labor market — employment data is beginning to show a very dangerous combination: declining new jobs, an apparent improvement in the unemployment rate (mostly due to changes in labor force participation), and continuous downward revisions of historical data. In the cycle, this almost always appears at the same stage — the economic inflection point has passed, but the market is just beginning to acknowledge it.
Second, after the data was released, the US dollar index surged then retreated, gold and US stock futures hesitated before rising — such a trend is not surprising, as recent months’ data from the US Bureau of Labor Statistics has been market-friendly. Note a detail: this time, there was no "dollar crash and stock market surge," indicating the market does not believe the problem has been solved.
Third, this is a rare reliable data point after the US government shutdown — non-farm payrolls are not about "how good the economy is," but about whether the Federal Reserve can continue to pretend to be calm. Traders still expect the Fed to ease monetary policy by about 50 basis points in 2026 (i.e., two 25 basis point rate cuts). The true role of this non-farm payroll report is not "good or bad," but to end the pretense.
This is not just a day's market movement, but the beginning of a phase.