The shutdown of the U.S. government has resulted in delays and sequential releases of various reports. While these reports collectively offer a broader perspective, Powell indicates that the numbers may not be entirely reliable due to data collection issues during the shutdown period. Let’s delve into what this barrage of data promises us.
Cryptocurrencies Need to Rise
The unemployment rate recently reached its highest level since September 2021. The 4.6% rate was unforeseen by any Fed member for 2025, highlighting the rationale behind interest rate cuts. Powell and his team focus on inflation, whereas the unemployment rate hits new peaks and inflation remains stable. The Fed’s dual mandate is maximum employment and inflation control. Since 2022, their emphasis on inflation has now led to an employment warning signal.
U.S. employment figures were revised down by 33,000 for the August-September period. Powell anticipated this, and recent reports confirming worse-than-reported employment bolster the case for continued interest rate cuts. However, cryptocurrencies continue their downward trend in this environment.
A series of events are curbing risk appetite, including the forthcoming interest rate decision from Japan, diminishing interest due to the year’s end, and the shocks expected in January from the MSCI and Supreme Court Tariff Decision.
U.S. Data Barrage
The BLS reports a 64% response rate for November, indicating less reliable data than pre-shutdown. However, a decline in employment is evident. U.S. interest rate futures predict two rate cuts in 2026 after labor and retail sales data, with a 58-basis point easing priced in for next year. January interest rate cut expectations rose from 22% to 33%.
The non-farm payroll expectation for October was -25K, but it was reported as -105K. August employment figures were revised from -4K to -26K, and September unemployment numbers were revised downward from 119,000 to 108,000. Non-farm payrolls in November were expected to be 50K but came in at 64K. Despite a 4.4% unemployment expectation, it peaked at 4.6%.
The decline in average earnings highlights further potential weaknesses in employment. The graph below shows the increase in unemployment since March 2023.
Despite being above 6% at the end of 2020, some within the Fed believe they can manage the current situation.
The graph above shows a clear decline in non-farm payrolls over five years, particularly in 2025. Unless new data exceeds expectations, an interest rate cut in January seems possible. However, these factors don’t alleviate the inherent pressures on cryptocurrencies, as BTC remains below 87,000 dollars.
