Why the Supreme Court’s tariff decision didn’t move markets
Summary
The Supreme Court’s recent tariff decision was expected to bring clarity, but markets barely moved.
In conversations with clients and across equity, rates, and FX markets, the reaction was notably muted. Unlike the volatility seen on Liberation Day, this ruling did not trigger a broad repricing of risk.
That restraint is telling.
Expectations were already priced in
Despite the perceived certainty of the ruling, markets continue to underwrite some level of tariffs going forward. Recent policy announcements reinforce that trade measures remain an active tool.
The limited reaction suggests the legal outcome was largely anticipated and embedded in positioning and, therefore, didn’t materially change the economic outlook.
The dollar and rates: little changed
We continue to see pressure on the U.S. dollar as investors look for stability elsewhere. Without a meaningful upward shift in rate expectations, there is little catalyst for sustained dollar strength.
Importantly, the decision didn’t significantly impact rate expectations. Markets remain in wait-and-see mode, focused on incoming economic data, Kevin Warsh’s confirmation process as prospective Fed Chair, and the Supreme Court case involving Lisa Cook alongside the DOJ investigation into Chair Powell.
The tariff ruling alone was not enough to shift the rate path narrative.
The fiscal undercurrent
Tariffs had generated $160 billion+ for the U.S. government up to February 20, 20261. That revenue is likely to change as new tariffs are implemented and rebates on existing tariffs are eventually processed. At the same time, the OBBBA legislation passed in 2026 is broadly expected to support growth while increasing budget deficits and U.S. government debt.
Stronger growth paired with wider deficits introduces more complex long-term rate dynamics than the tariff decision itself.
The broader takeaway
The muted market response underscores a broader shift. Policy risk is now structural. Markets are weighing trade, fiscal expansion, and monetary leadership transitions together, not in isolation.
When markets barely move, it often means expectations have already moved beneath the surface. Understanding those shifts, rather than the headline, is what ultimately matters for capital strategy.
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About the author
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Amol Dhargalkar
Managing Partner
ChairmanKennett
Amol Dhargalkar is a Managing Partner and Chairman for Chatham’s Board of Directors. He brings over 20 years of experience in derivatives capital markets expertise.
Disclaimers
Chatham Hedging Advisors, LLC (CHA) is a subsidiary of Chatham Financial Corp. and provides hedge advisory, accounting and execution services related to swap transactions in the United States. CHA is registered with the Commodity Futures Trading Commission (CFTC) as a commodity trading advisor and is a member of the National Futures Association (NFA); however, neither the CFTC nor the NFA have passed upon the merits of participating in any advisory services offered by CHA. For further information, please visit chathamfinancial.com/legal-notices.
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