Bitcoin
Bitcoin (BTC) Price Drops After Strong Jobs Data
The US job market remained strong in May, with the government reporting the creation of 272,000 jobs, well above estimates of just 185,000 and well above April’s 165,000 (revised from the previously reported 175,000).
The unemployment rate in May was 4.0%, compared to estimates of 3.9% and 3.9% in April.
The price of bitcoin (BTC) fell sharply from a two-month high of just under $72,000 in the minutes following the numbers. At press time, BTC was trading at $70,900, down 0.5% in the last 24 hours.
Wage data from this morning’s report shows that average hourly earnings rose 0.4% in May, versus forecasts of 0.3% and 0.2% in April. On an annual basis, average hourly earnings were 4.1% higher, compared to estimates of 3.9% and 4.0% in April.
After rising during the first part of 2024, interest rates have seen a downward trend over the past five weeks as some recent US economic data pointed to a slowdown in both economic growth and inflation – the Treasury yield 10 years before this morning’s report the numbers were at 4.30% against a high of 4.71% in 2024 at the end of April.
The drop in rates has been a boon for risk assets, with the major U.S. stock market averages rising to record levels and the price of bitcoin rising from around $60,000 to near its record high, just above $73,500.
Ideas that major Western economies are about to fully enter a cycle of monetary easing received even more merit this week when both the Bank of Canada and the European Central Bank cut their respective benchmark interest rates for the first time in several years. . As for the US, the odds of a Fed rate cut have risen sharply lately as investors ahead of this morning’s report having priced in about 55% probability of moving forward at or before the bank’s policy meeting in September.
With today’s strong numbers, it is likely that much of this thinking will be reversed, at least in the short term. In addition to bitcoin’s rapid pullback, the 10-year Treasury yield rose 12 basis points to 4.42% and U.S. stock index futures point to a lower open. Checking other indicators, the US dollar rose 0.5% and gold fell more than 2%.
Bloomberg Chief Economist Anna Wong an interesting contrary opinion in the data, suggesting that the rise in the unemployment rate is the most important indicator of the reality of the employment situation. “[The government] The model for estimating the birth and death of companies – which added 231,000 jobs to non-agricultural payrolls in May – falls short of the reality of the increase in establishment closures and the drop in company formation. We believe the underlying pace of current job gains is likely less than 100,000 per month.”