The policy outlook for the Federal Reserve grew more uncertain on Friday as signs of a cooling labor market emerged while inflation risks appeared to be intensifying.
Risk assets moved sharply lower after Donald Trump indicated that prospects for a negotiated agreement with Iran were effectively off the table.
“There will be no deal with Iran except UNCONDITIONAL SURRENDER,” the U.S. president wrote in a post on Truth Social.
The statement rattled financial markets, sending West Texas Intermediate crude oil to a multi-year high near $90 per barrel. Equity futures also declined, with contracts tied to the Nasdaq Composite falling about 1.8%. The sell-off spread to digital assets, pushing Bitcoin roughly 5% lower to around $68,800, marking fresh session lows.
Hiring slowdown becomes clearer
At the same time, new economic data pointed to growing weakness in the U.S. labor market. Figures released by the U.S. Bureau of Labor Statistics showed that nonfarm payrolls unexpectedly declined by 92,000 in February. The unemployment rate also edged higher to 4.4%, up from 4.3% the previous month.
The disappointing report adds to evidence that hiring momentum has been fading for months.
“Let me put this another way: The U.S. economy has lost jobs since April 2025,” economist Heather Long wrote on X. “Total job gains from May 2025 to February 2026 are now -19,000. Companies are not hiring in the face of all of these headwinds and uncertainty.”
Normally, labor market weakness of this magnitude might prompt the Federal Reserve to begin lowering interest rates. However, policymakers are still grappling with inflation that remains above their 2% target, and the surge in oil prices could further complicate the inflation outlook.
For now, interest-rate markets see little chance of near-term easing. Traders are pricing in just a 4% probability of a rate cut in March and roughly a 17% chance of a reduction in April.
