The U.S. Labor Department reported weaker-than-expected job growth in February, with nonfarm payrolls adding just 273,000 jobs against forecasts of 325,000. The unemployment rate rose slightly to 3.9% from 3.7%, while average hourly earnings grew by 0.3% month-over-month, below the 0.4% estimate. This marked the second consecutive month of below-consensus job gains, raising concerns about the resilience of the U.S. labor market amid persistent inflation and high interest rates. The disappointing data has reignited speculation about the Federal Reserve's potential shift toward rate cuts in 2024. Traders now price in a 70% probability of a 25-basis-point cut at the July FOMC meeting, with the S&P 500 and Nasdaq futures dipping on fears of prolonged economic weakness. The U.S. Dollar Index fell to 104.50 as investors reassessed the Fed's tightening trajectory, while Treasury yields dropped across the curve. For global markets, the report underscores the fragility of the U.S. economic expansion. Gulf investors should monitor the Fed's response in upcoming policy statements and the March employment data. A sustained slowdown in hiring could accelerate rate cuts, boosting risk assets but potentially weakening the dollar. Key assets to watch include the USD index, S&P 500, and U.S. Treasury yields.
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