Jobless Data Makes March Rate Hike More Likely

Bitcoin is down today, though analysts say impact of interest rate rise is priced in

article-image

Federal Reserve Chair Jerome Powell | Blockworks exclusive art by Axel Rangel

share

key takeaways

  • Unemployment numbers continue to improve, suggesting that a March rate hike is looking more likely
  • Bitcoin and other risk assets largely have hikes priced in already, analysts say

US jobless claims rose last week after three straight weeks of declines. Unemployment still remains at a historic low, however, a key metric that may mean hawkish action from the Federal Reserve is to come.

Initial jobless claims rose to a seasonally adjusted 248,000 last week, up from 225,000 the prior week, according to data from the Department of Labor. Continuing claims, which provide insight into the number of citizens receiving state unemployment benefits, declined to 1.59 million, down from 1.62 million the week prior.

The largely positive report comes after Federal Reserve Chair Jerome Powell indicated that maximum employment is a key goal that must be met before the Fed will raise interest rates or taper asset purchases.

“In their discussion of current economic conditions, participants noted that indicators of economic activity and employment had continued to strengthen,” minutes from the Fed’s January meeting read. 

While the employment situation may be looking up, inflation continues to rise at the fastest rate in 40 years, leading analysts to believe rate hikes are coming in March.

“​​The central bank will kick off its tightening cycle next month and a number of consecutive hikes will likely follow,” Craig Erlam, senior market analyst at OANDA, wrote in a note Thursday. 

“Whether they’ll kick things off with a 50 basis point hike isn’t yet clear and will depend on the data in the coming weeks, but there doesn’t appear to be consensus for it yet, despite markets pricing in a fair chance of it happening.”

Fed fund futures show a 69.2% probability that the Fed will raise rates between 25 to 50 basis points at its March 15-16 meeting, which is 19 trading days away.

The prospect of higher rates has put a damper on risk assets, including bitcoin and other cryptocurrencies, in recent months. Bitcoin fell about 2% Thursday an hour after the release of the jobs report, but analysts remain optimistic.

“[Bitcoin] has shown real resilience in recent weeks, but is struggling to generate the momentum needed to take the next step,” Erlam said. “The uncertainty in the markets probably isn’t helping, although it hasn’t held it back recently, a break above here could be a very bullish development for bitcoin.”


Get the day’s top crypto news and insights delivered to your email every evening. Subscribe to Blockworks’ free newsletter now.


Want alpha sent directly to your inbox? Get degen trade ideas, governance updates, token performance, can’t-miss tweets and more from Blockworks Research’s Daily Debrief.


Can’t wait? Get our news the fastest way possible. Join us on Telegram and follow us on Google News.


Tags

upcoming event

MON - WED, MARCH 18 - 20, 2024

Digital Asset Summit (DAS) is returning March 2024. This year’s event will be held in our nation’s capital, where industry leaders, policymakers, and institutional experts will come together to discuss the latest developments and challenges in the ever-evolving world of cryptocurrency. […]

upcoming event

MON - WED, SEPT. 11 - 13, 2023

2022 was a meme.Skeptics danced, believers believed.Eventually, newcomers turned away, drained of liquidity and hope.Now, the tide is shifting and it’s time to rebuild. Permissionless II is the brainchild of Blockworks and Bankless. It’s not just a conference, but a call […]

recent research

Cosmos Hub: ATOM Economic Zone

Research

Replicated Security, the Hub’s Validation-as-a-Service offering that went live in March, is the first step in bringing value accrual to ATOM stakers.

/

article-image

Following its deployment on zkSync Era, Rocket Pool has no immediate plans to launch on other chains

article-image

“Billions of dollars” are currently stored in apps like Venmo and PayPal and just like crypto exchanges, they are not FDIC insured

article-image

Bitcoin price predictions are meaningless, so let’s expend our prediction energy on something that actually matters

article-image

A new complaint against Elon Musk and Tesla alleges that Musk manipulated both bitcoin and dogecoin

article-image

Kenya’s central bank doesn’t seem enamored by the idea of a CBDC but hasn’t slammed the door shut yet

article-image

Both Ethereum and Solana have enjoyed vibrant DeFi environments, but this has not yet been the case for Cosmos