Macro & Markets Weekly — Mar 10, 2026

The economy shed 92,000 jobs in February — the worst miss in months — while wages came in hot at 3.8% year-over-year, and oil surged above $100 per barrel after an effective suspension of transits through the Strait of Hormuz. That's the stagflation cocktail in a single week: cooling where you don't want it, burning where it hurts. The Fed meets March 18 with a fresh dot plot, almost no good options, and a bond market that just told you it's more worried about inflation than recession.

If February's nonfarm payrolls were a one-off miss, you could look through it. But there's a pattern here that's getting impossible to explain away.

The US economy shed 92,000 jobs in February, the most in four months, against a forecast that was already pessimistic at +59,000. Then came the revision: December's originally reported +48,000 was revised to -17,000, meaning the economy was quietly losing jobs in Q4 2025 and nobody knew it. December and January combined were 69,000 lower than previously reported. Once you fold in the revisions, total net job gains since mid-2025 are effectively zero — reframing the story from "resilient labor market" to "jobs recession outside healthcare."

Healthcare itself — the one sector that has reliably padded payrolls — lost 28,000 jobs, largely amid a Kaiser Permanente strike that sidelined 30,000+ workers during the BLS survey week. That's a technical distortion and it will likely reverse. But federal government employment continued its grinding decline — down 330,000 since October 2024, or 11% of the total federal workforce — and information-sector employment fell another 11,000, extending a structural slide that has nothing to do with strikes.

The number that should keep you up at night: the average duration of unemployment hit 25.7 weeks, the longest since December 2021. When it takes people longer to find work even as the headline unemployment rate (4.4% in February) looks only modestly worse, the market isn't cooling — it's bifurcating. Jobs exist for people with the skills employers want right now. For everyone else, the queue is getting longer.

Watch March's print. If healthcare bounces back and the total is still weak, there's no more technical cover.

Two weeks ago, falling gas prices were helping headline inflation drift toward 2%. Now, the Iran conflict and the effective suspension of transits through the Strait of Hormuz have flipped energy from tailwind to tax almost overnight.

Brent crude has surged above $100 per barrel over the past two weeks, with intraday peaks reportedly touching the mid-$120s after attacks on regional energy infrastructure. Major shippers have suspended transits through Hormuz, where roughly 20% of the world's oil and LNG normally flows. The bottleneck isn't just crude — it's LNG shipments, which could raise power and industrial input costs in Asia and Europe before any US CPI impact arrives.

The macro read-through is textbook but painful: higher energy costs act like a tax on consumers and margins while re-inflating CPI just as it was converging to target. If $100+ oil persists for more than a few weeks, expect upward revisions to inflation forecasts, renewed pressure on real incomes, and tougher conversations around capex — especially in fuel-intensive sectors like airlines, logistics, and chemicals.

Watch IEA emergency talks and any coordinated strategic petroleum reserve releases. De-escalation or stock releases could pull oil back under $90 and materially ease the pressure. Without them, the Fed's inflation problem just got a second wind.

Going into this week, the Fed's March 18 meeting looked like the most boring event on the calendar — hold rates, wait for data, repeat. The jobs report and oil shock changed the calculus, though not in the way doves were hoping.

Markets are pricing a 97% chance the Fed holds at 3.50%–3.75% as of March 6. That part's settled. The debate is about what comes next: the consensus now sees at most two rate cuts for all of 2026, with none priced for 2027.

But the committee is visibly fractured. At the January meeting, Stephen Miran and Christopher Waller dissented, preferring a quarter-point cut. They now have a much stronger argument. San Francisco Fed President Mary Daly put it bluntly after Friday's report: "Both of our goals are risks now." When the same data creates a case for both cutting and holding, the committee stays stuck.

The real event isn't the rate decision — it's the Summary of Economic Projections and the dot plot (each member's projected rate path). Every downgrade to the growth forecast and every upward revision to unemployment will be scrutinized. If the median 2026 projection drops from two cuts to one, it confirms the market has correctly repriced. If it holds at two, the short end rallies.

Adding to the tension: Chair Powell's term ends in May 2026. A successor perceived as more dovish — or more susceptible to political pressure — would likely push long-end yields higher even as the short end responds to cuts. That's a bear-steepener scenario that would hurt commercial real estate, long-dated infrastructure, and anyone who needs cheap capital to make their project math work.

The bond market just gave a very 1970s answer to a very 2020s problem: worry more about inflation than about jobs.

Over the week through March 6, the 10-year Treasury moved to around 4.1%–4.2%, up from just under 4%, while the 2-year rose by a similar amount. Breakeven inflation expectations pushed back toward the mid-2% range over the same week as traders repriced the CPI path. Yields climbing on a negative payrolls print is an early stagflation tell — the market is saying the inflation risk from oil outweighs the growth risk from jobs.

For rate-sensitive sectors — housing, autos, utilities, long-duration tech — the message is that the discount rate on future cash flows is refusing to come down even as growth cools. Mortgage applications have already dropped meaningfully as 30-year fixed rates climbed, adding a real-economy transmission channel.

Meanwhile, the DXY surged roughly 2% over the week through March 6 as investors chased safe havens, amplifying stress on emerging-market borrowers and compressing commodity demand. That dollar strength matters for multinational corporates, exporters, and any EM central bank now weighing intervention.

High-yield spreads — the extra yield investors demand to hold corporate debt instead of safe Treasuries — have been remarkably resilient. That resilience is both reassuring and alarming.

The ICE BofA US High Yield Index option-adjusted spread sits around 3.19% as of March 6, near 25-year tights. The market is pricing almost no incremental risk into corporate debt at precisely the moment the macro data is deteriorating. But the direction has shifted: spreads have widened roughly 20–30 basis points over the week through March 6 off their tights, and the weakest credits (CCC-rated) are taking the brunt — with some software company loans gapping wider on AI disruption fears.

The asymmetry matters for anyone with funding decisions ahead. With 2026 capital market forecasts as high as $2.25 trillion in high-grade issuance — a 35% year-over-year increase — supply is coming in size. If demand softens even modestly, the spread cushion that isn't there gets tested fast. Meanwhile, CLO issuance — the plumbing of leveraged buyouts — stalled in March as the Strait flared up, cutting demand for leveraged loans and threatening deal flow across every sector that depends on PE-backed M&A.

For capital-intensive sectors, the current window of tight spreads and open issuance markets is a genuine funding opportunity. The question is how long it stays open.