Initial Jobless Claims Suggest Continued Fed Tightening, but Investors Appear Unfazed

Bitcoin investors have been unmoved by recent macroeconomic data. Muted reactions suggest that they’ve already priced in much of what has occurred

AccessTimeIconJul 20, 2023 at 7:22 p.m. UTC
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  • Initial jobless claims fall for the second consecutive week. Labor markets remain strong
  • Second quarter wage growth currently outpacing inflation indicates that while progress has been made, more will be needed.
  • Crypto markets have remained stable amid mixed macroeconomic data.

Initial jobless claims in the United States for the week ending July 15, declined to 228,000, 9,000 lower than the prior week, and below expectations for 242,000. The second, consecutive weekly decline reflects a persistently strong labor market and

It also marks the mild reaction to significant macroeconomic events over the past 10 days.

BTC prices moved less than 2% after last week’s Consumer Price Index, Non-Farm Payrolls and Quarterly GDP growth.

The knee-jerk narrative for cryptocurrencies for today’s release is that tight labor markets prolong any chance that the Federal Open Market Committee (FOMC) will halt interest rate increases. This would likely limit crypto prices.

The real-time crypto market reaction suggests that crypto investors have already included this into their investment calculus. So while a lid appears to be on bitcoin prices, its appears to be a light one, applying minimal downward pressure

BTC prices fell 0.22% during the 8 AM ET hour, following the data release. Ether by comparison sank 0.25%. Both declines occurred on lower than average volume, illustrating the muted impact of what has become a recurring theme for U.S. labor markets.

The 4-week average of jobless claims declined for the third consecutive week. If the FOMC is looking for weaker job growth before pivoting to a lower interest rate environment, this news would not support such a move.

Further exacerbating tight labor markets is higher median earnings for wage and salaried workers. According to the Bureau of Labor Statistics, second quarter median earnings for full- time wage and salary workers was 5.7% higher than a year prior, compared to a current 4% increase in Consumer Prices.

While inflation has been steadily declining, labor markets and overall earnings’ strength would likely cause prices to rise, were the FOMC to forego a rate hike. Market expectations for a 25 basis point (bps) increase on July 26 are now 99.8%, up from 98% a day prior.

Crypto investors seem unfazed with bitcoin levels almost identical to where they stood 30 days ago. The same holds true for Ether, as both assets have been trading near their respective 20-day moving averages.

Momentum for both is neutral as well. Their respective Relative Strength Index (RSI) figures sit near 50, signaling neither bullish nor bearish sentiment.

Bitcoin 7/20/23 (CoinDesk Indices)

Edited by James Rubin.


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Glenn Williams

Glenn C Williams Jr, CMT is a Crypto Markets Analyst with an initial background in traditional finance. His experience includes research and analysis of individual cryptocurrencies, defi protocols, and crypto-based funds. He owns BTC, ETH, UNI, DOT, MATIC, and AVAX

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