Greenbull Investments Sarl
Switzerland
2m
The U.S. labor market delivered its clearest signal yet of meaningful deterioration, with August adding only 22,000 jobs against expectations of 75,000. More concerning, June data was revised to show the first monthly job loss since 2020, while unemployment climbed to 4.3% - the highest level this year. This marked softening has pushed Fed rate cut probabilities to 100% for September. Multiple indicators confirm the employment slowdown is broadening: - Job openings fell below total unemployed for the first time since 2021 - ADP private payrolls added just 54,000 versus 68,000 expected - June employment was revised to show a 13,000 job loss - the first negative month in four years - Labor force participation and hiring continue declining across sectors The deterioration reflects both supply and demand factors, with immigration reform limiting labor supply while trade and tariff uncertainties reduce employer demand. Markets price aggressive Fed response: Bond markets responded dramatically to the employment weakness: - 100% probability now assigned to September rate cut - 12% chance of a 0.5% cut versus traditional 0.25% - Markets expect six total cuts bringing rates to 3.0% by 2026 - 2-year Treasury yield fell to yearly lows under 3.5% - 10-year yield dropped below 4.1% The yield curve steepening benefits financial institutions by improving lending margins, while lower borrowing costs should support economic activity. Inflation dynamics remain complex: While goods inflation from tariffs continues pressuring prices, services inflation (66% of the basket) shows signs of moderating as the labor market softens. Housing costs, a major services component, are already cooling in many markets. Crypto positioned for monetary tailwinds: The combination of weakening employment and likely aggressive Fed easing creates increasingly favorable conditions for digital assets: - Lower opportunity cost: Declining yields reduce the appeal of traditional fixed-income alternatives - Dollar weakness: Fed dovishness typically pressures the DXY, historically supportive of crypto - Risk asset rotation: Institutional flows continue with BlackRock's recent $85.4 million Ethereum purchase - Liquidity conditions: Easier monetary policy increases overall market liquidity Historical precedent supports optimism: Markets typically respond favorably when the Fed cuts rates outside of recession scenarios. With corporate earnings remaining solid and fiscal stimulus from the pending tax bill providing 2026 support, fundamental conditions remain constructive. Strategic implications: Near-term volatility may emerge as markets digest employment weakness and enter seasonally volatile September-October period. However, the emerging policy support framework - combining monetary easing with fiscal stimulus - should provide stronger foundations for year-end and 2026 performance. For crypto investors, the accelerating Fed pivot represents a potential inflection point. The combination of institutional adoption momentum, improving regulatory clarity, and increasingly accommodative monetary conditions creates a compelling setup as the traditional correlation between crypto and broader risk assets strengthens. The labor market's clear deterioration has effectively forced the Fed's hand, likely triggering the monetary easing cycle that crypto markets have been anticipating since the sector's institutional adoption began accelerating earlier this year.
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