Weak U.S. Jobs and Oil Shock Complicate Fed Cut Timing as CPI, PCE Loom

Overview

• The Bureau of Labor Statistics reported a 92,000 drop in February nonfarm payrolls, the unemployment rate rose to 4.4%, and average hourly earnings increased 0.4% on the month and 3.8% year over year.
• Analysts shifted expected Federal Reserve easing from June and September to September and December, with ING trimming projected 2026 cuts to roughly 40 basis points from about 60.
• February CPI and the delayed January PCE, the Fed’s preferred gauge, are scheduled next week unusually close to a rate decision, creating a timing risk for policymakers.
• A recent conflict involving Iran has lifted oil prices, posing fresh inflation pressure that may not be fully captured in this week’s data.
• Housing shows gradual improvement in affordability and inventory, yet builder sentiment remains weak and 30‑year mortgage rates hover near 6.00%.