February NFP: jobs data and yields in focus

Markets are heading into today’s US February jobs report looking for confirmation on whether labour market momentum is starting to cool.

What the latest labour indicators suggest

Analysts at Danske Bank expect Nonfarm Payrolls growth to slow to 70k in February, down from 130k in January, with the unemployment rate holding steady at 4.3%.

Recent high-frequency indicators suggest the labour market remained resilient heading into February. Weekly jobless claims, ADP's private sector employment estimate, and Indeed Hiring Lab's daily job postings have all been consistent with a labour market that remains resilient, even if the pace of job creation has moderated 

That moderation fits Danske's broader macro view. The bank recently revised its 2026 US GDP forecast up to 2.0% from 1.8%, but still expects structural factors – including stagnant labour supply growth and cooling wage pressures – to weigh on the outlook this year.

Labour market signals ahead of the report

Weekly jobless claims held unchanged at 213k for the week ending February 28, remaining at low levels. Continuing claims edged slightly higher but not materially so.

The February Challenger report offered an encouraging signal on layoffs: while hiring announcements from firms stayed subdued, layoff announcements dropped sharply to 48.3k from 108k in January on a seasonally adjusted basis.

On productivity, flash Q4 growth slowed to 2.8% quarter-on-quarter annualised from 5.2% in Q3, reflecting the weaker-than-expected GDP print released earlier. That pushed unit labour cost growth up to 2.8% q/q AR from -1.8% in Q3. By historical standards, labour cost pressures are now relatively modest.

Danske sees slowing unit labour cost growth as one of the factors that will keep overall inflation in check – the bank forecasts headline inflation at 2.4% for 2026 and core inflation at 2.5%, both revised slightly down from previous estimates.

What a strong print could mean for markets

Volatility has been creeping higher ahead of the release. Both the VIX and the Move index have moved up, and credit spreads including ITRAX have widened. Moves in the Schatz ASW-spread have remained contained, suggesting markets are not yet pricing a significant risk-off episode of the kind seen in past stress periods.

If the jobs report comes in on the strong side, the most likely consequence is additional pressure on US bond yields and swap rates. Danske currently expects the Fed to deliver two more 25bp cuts – in June and September – before holding the terminal rate at 3.00–3.25% through the remainder of 2026 and into 2027. A hotter-than-expected labour market print would put that timeline under pressure, making today's release a key catalyst for rates markets and dollar positioning heading into the weekend.

The US February jobs report is due today, March 6, at 8:30 a.m. ET.