Traders cut the odds of a September Federal Reserve rate hike to 44% on Friday after US non-farm payrolls unexpectedly fell by roughly 23,000 in July, all while Bitcoin (BTC) rose a very modest 0.7% in the hour after the release, jumping to a local high of $65,300.
Moving on, payrolls were forecast to rise by 83,000, according to the Dow Jones consensus, and the Bureau of Labor Statistics (BLS) published the decline at 8:30 a.m. ET, as per CNBC.
CME Group’s FedWatch tool put the probability of a September move at 44% and October at 58.3% once the numbers landed, and Dow futures climbed close to 200 points as Treasury yields fell.
Bitcoin traded at $64,500 in the 30 minutes before the release and touched $65,300 in the hour that followed, according to data from CoinGecko.
Revisions Deepen the Slowdown
BLS cut May payrolls by 66,000 to 63,000 and June by 37,000 to 20,000, leaving the two months a combined 103,000 weaker than previously reported. Average monthly job creation across the past year now stands at 34,000.
Local government education shed 50,000 positions, leisure and hospitality 40,000, retail trade 19,000, and financial activities 14,000. Moreover, health care added 22,000, below its 36,000 monthly average, and construction added 22,000. Private payrolls rose 30,000 while government employment dropped 53,000.
Average hourly earnings rose 2 cents to $37.62. Annual wage growth slowed to 3.2%, under the 3.5% forecast and the weakest since May 2021. The unemployment rate edged down to 4.1% as the labor force shrank by 264,000 and participation fell to 61.4%.
Hike Bets Fade as Bitcoin Lags
The Federal Open Market Committee held its benchmark rate at 3.50% to 3.75% on July 29 by a 9-to-3 vote, with three regional presidents preferring a quarter-point increase. CryptoPotato covered the same 3.50% to 3.75% range being held at Kevin Warsh’s first meeting as Fed chair in June. Inflation has run above the central bank’s 2% target.
“This morning’s report is a game changer in the sense that all of the recent focus has been on inflation and this report highlights the risks that are embedded in the labor market as well,” said Chris Zaccarelli, chief investment officer at Northlight Asset Management.
Crypto responded far more violently to the opposite surprise two months ago, when stronger-than-expected labor data triggered a hawkish repricing and drove Bitcoin to $59,100, a 20% weekly loss accompanied by $1.7 billion in liquidations.
Digital asset funds bled $454 million in a single week during an earlier stretch of fading rate expectations.
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