Inflation vs. Employment Data
Derek Lim, head of research at Caladan, told Decrypt that the inflation metric is more important than employment data. A lower‑than‑expected inflation reading would increase pressure on the Federal Reserve to cut rates sooner, which is favorable for risk assets.
Fed Policy Rate Outlook
Despite the payroll surprise, the Federal Reserve is seen as unlikely to pivot to stimulus in the near term. CME’s FedWatch tool shows a 94.6% probability that the Fed will keep its policy rate unchanged at 3.50%‑3.75%.
Market Reaction and Crypto Prices
The expectation of steady rates has weighed on market sentiment, prompting a correction across crypto and broader risk assets. Interest‑rate futures were quickly repriced after the jobs data, pushing expectations for cuts into the second half of the year.
Bitcoin is down 0.5% over the past 24 hours, trading around $67,200, while Ethereum is flat near $1,970. The leading crypto has been consolidating between $62,822 and $72,000, with muted volatility after the late‑January/early‑February sell‑off.
Key Takeaways
- Inflation data currently drives Fed expectations more than payroll numbers.
- The Fed is likely to hold rates steady for now, limiting immediate stimulus.
- Stable rates support risk‑on assets, but market fragility keeps crypto prices in a tight range.
- Watch for any inflation surprises that could reignite expectations of earlier rate cuts.