U.S. Treasury yields edged lower after the Supreme Court raised doubts about the legality of tariffs imposed during the Trump administration. The justices questioned whether the White House had overstepped its authority under emergency economic powers when applying sweeping tariffs on goods from China and other countries. Investors are watching closely because a ruling against the government could set a major precedent potentially forcing Washington to refund billions collected through those tariffs. The uncertainty has rattled traders, nudging bond yields down as investors sought safety in government debt.

At the same time, the broader economic picture remains strong, which complicates the bond market’s direction. Recent labor data and resilient consumer spending suggest that the Federal Reserve might keep interest rates higher for longer, even as inflation cools. This push-and-pull between legal risk and economic strength is creating a strange mix of caution and confidence across Wall Street. For now, the market seems to be balancing optimism about growth with growing anxiety over how political decisions can shake financial stability.