Venezuela Situation Has Limited Impact On U.S. Treasuries As Wall Street Turns Attention To “Super Friday”

At the outset of the new year, the U.S. Treasury market exhibited relative calm, with investors showing muted responses to political unrest in Venezuela. Market participants appeared more focused on the slate of macroeconomic events scheduled for the first full week of 2026, most notably the U.S. December nonfarm payrolls report due on what market participants have dubbed “Super Friday.”

Consensus economist forecasts indicate a median payrolls gain of 73,000 for December, up from 64,000 in November, while the unemployment rate is projected to edge down from 4.6% to 4.5%. With the effects of the record 43‑day federal government shutdown fading, analysts expect the upcoming employment release to provide a cleaner read on labor market conditions. John Briggs, Head of U.S. Rate Strategy at Natixis North America, described the December jobs report as “the first clean U.S. economic report we have received in quite some time.”

Zachary Griffiths, Head of Investment Grade and Macro Strategy at CreditSights, warned that as data flow returns to a more regular cadence, market volatility is likely to rise after an unusually tranquil period at the end of 2025. He added that weaker‑than‑expected payrolls could push Treasury yields lower, with the 10‑year yield potentially retreating toward the 4% area. Griffiths argued that a softer labor market would increase the likelihood of deeper economic slowing in 2026 than currently priced by markets, enabling the Federal Reserve to cut rates further and steepen the yield curve.

Compounding the week’s significance, the U.S. Supreme Court may issue a ruling on the legality of President Trump’s global tariff authority on the same Friday that the December payrolls are released, an outcome that could exert additional influence on fixed‑income markets.

Portfolio Manager Vincent Ahn of Wisdom Fixed Income Management observed that interest‑rate and credit markets are primarily driven by U.S. growth, inflation and the Fed’s policy path, and therefore this Friday’s macro calendar is likely to matter more for Treasuries than developments in Venezuela. He noted that Venezuela would only materially affect markets if it triggered sustained oil‑price volatility that translated into higher gasoline prices and broader inflation—an effect that has not been evident to date. From a trading perspective, Ahn characterized recent Venezuela headlines as reflecting localized crude flows and logistical disruption rather than a shift in the global oil supply‑demand balance; absent persistent oil‑price moves that alter inflation expectations, Treasuries and credit spreads will continue to respond to more consequential macro drivers.

Tensions in Venezuela persisted on Tuesday, with heavy security patrols visible in Caracas following U.S. intervention over the weekend that resulted in the arrest of President Maduro. Separately, President Trump’s renewed comments about assuming control of Greenland, currently under Danish sovereignty, prompted public statements of support for Greenland from European leaders.

On Tuesday, U.S. Treasury yields across maturities moved only marginally higher. The two‑year yield rose 1.04 basis points to 3.463%, the five‑year yield increased 0.69 basis points to 3.713%, the 10‑year yield climbed 0.79 basis points to 4.173%, and the 30‑year yield ticked up 0.30 basis points to 4.863%. FHN strategist Will Compernolle attributed the modest moves to routine market noise as trading volumes normalize at the start of the year amid a calendar packed with data and events. He added that markets do not currently price in supply‑disruption risks akin to those seen in the Middle East, and therefore there has been no pronounced flight‑to‑quality in Treasuries.

Despite limited near‑term volatility, the Treasury market approached a notable technical development this week: the spread between 10‑year and two‑year yields widened to its highest level in nearly nine months, signaling that traders are increasingly positioned for Fed easing in 2026. The 10‑year yield briefly exceeded the two‑year yield by more than 72 basis points for the first time since April of the prior year, a steepening dynamic driven by expectations of monetary loosening and an early‑year surge in corporate bond issuance that has put upward pressure on long‑dated yields.

Gregory Faranello, Head of U.S. Rates Trading and Strategy at AmeriVet Securities, suggested that the gap between two‑ and ten‑year yields could reach roughly one percentage point this year—the widest since 2021—implying potential target ranges near 3% for two‑year yields and around 4% for ten‑year yields if market expectations for policy easing materialize.