December's job numbers could tell us something important about where the economy is really heading. Businesses seem to be pumping the brakes on hiring—and the reasons are pretty clear: tariff uncertainty and massive spending on AI infrastructure are eating into hiring budgets. When companies get spooked by trade policy, they typically freeze headcount first.

Now here's the interesting part: the unemployment rate is expected to dip to 4.5%, which might sound like good news. But that's exactly the kind of data that could convince the Federal Reserve to keep rates steady. A tighter labor market combined with controlled inflation gives the Fed less reason to cut further. For those watching capital flows, this matters—sticky rates mean dollar strength, which historically creates different market dynamics across risk assets.