The outlook for the Federal Reserve became increasingly uncertain on Friday as a weakening labor market coincided with renewed inflation risks.

Risk assets extended their losses after Donald Trump appeared to shut the door on the possibility of a negotiated agreement with Iran.

“There will be no deal with Iran except UNCONDITIONAL SURRENDER,” the U.S. president said in a post on Truth Social.

The remarks rattled global markets, pushing West Texas Intermediate crude oil close to a multi-year high near $90 per barrel. Equity futures also moved lower, with contracts linked to the Nasdaq Composite falling about 1.8%. The sell-off spilled into digital assets, sending Bitcoin down roughly 5% to around $68,800, marking fresh session lows.

Job market cools

At the same time, new economic data pointed to growing weakness in the U.S. labor market. According to the U.S. Bureau of Labor Statistics, nonfarm payrolls unexpectedly fell by 92,000 in February. The unemployment rate also rose to 4.4%, up from 4.3% in the previous month.

The report adds to evidence that hiring has been slowing for some time.

“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.”

Ordinarily, such weak labor market data might increase pressure on the Federal Reserve to cut interest rates. However, policymakers are still grappling with inflation that remains above the central bank’s 2% target, and the recent surge in oil prices threatens to intensify price pressures.

For now, interest-rate markets see little chance of an immediate move. Traders are pricing in just a 4% probability of a rate cut in March and about a 17% chance of easing in April.