Stagflation Worries: The March Labor Market Preview

The ISM March flash suggests modest job losses in March, while other March data still point to a relatively solid labor market. The primary risk is rising stagflation concerns and a changing Fed reaction function, with markets beginning to price a policy rate hike in 2026. This repricing raises upside pressure on bond yields and forces investors to reconsider duration and inflation-sensitive positions.

Analysis

The ISM March flash suggests modest job losses in March, while other March data still point to a relatively solid labor market. The primary risk is rising stagflation concerns and a changing Fed reaction function, with markets beginning to price a policy rate hike in 2026. This repricing raises upside pressure on bond yields and forces investors to reconsider duration and inflation-sensitive positions.