5 things to expect from US jobs data: numbers, caveats and reactions

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Upcoming US jobs data could present a somewhat misleading picture, analysts at several financial firms warn. Financial markets, including crypto, are bracing for potential volatility as the US Bureau of Labor Statistics (BLS) prepares to release its preliminary estimate on Wednesday, with data based on benchmark revisions to monthly non-farm payrolls.

With this potentially wild Wednesday in the markets coming up, we’ve prepared some notes on what’s to come. Here’s a breakdown of five key things crypto investors should know about this data release from the BLS and how it could impact crypto markets.

1. The potential downward revision of job growth

The BLS report, which covers April 2023 to March 2024, is expected to paint a gloomier picture of the US economy than previously thought, with job growth slowing. However, leading investment banks warn that the data could be misleading and overstate economic weakness.

2. Misleading Data Warnings

Goldman Sachs warns that the downward revision could be misleading. The bank’s economic research team said:

“While next week’s revision may revise the pace up to 165-200k/month, we believe some of that revision will be in error and that the ‘true’ pace of employment growth over that period was likely more close to 200-240k/month. .”

3. Potential market reaction

The revelation of weaker job growth could rekindle recession fears, potentially triggering a turnaround away from risk assets, including crypto. This reaction would reflect market behavior seen following the July jobs report released earlier this month.

4. Significant reduction in the number of salaries

Morgan Stanley, a multinational investment bank and financial services firm, is projecting a substantial downward revision to payrolls, estimating a cut of 600,000 jobs from current reports. This implies a reduction of around 50,000 jobs per month in the 12 months to March.

5. Publication of the minutes of the Federal Reserve

Following the release of the BLS data, market attention will turn to the minutes of the Federal Reserve’s July meeting, scheduled for release at 18:00 UTC. Morgan Stanley analysts noted:

“We will be looking into why the FOMC wanted to wait until September to consider easing monetary policy and whether a 50bp rate cut was discussed.”

The combination of potentially misleading economic data and the outlook for the Federal Reserve’s monetary policy deliberations could create a complex trading environment for crypto markets. While initial reactions may be skewed to the downside if the jobs data looks weak, savvy market participants can look beyond the headline numbers to gauge the true state of the US economy.

How the crypto market reacts to macroeconomic data and policy decisions has become increasingly nuanced. Traders and investors in the space will need to carefully weigh the implications of Wednesday’s releases against broader economic trends and potential policy changes.

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