Share this article

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

With this potentially wild Wednesday in the markets ahead, we’ve prepared some notes on what’s to come. Here’s a look at five key things crypto investors need to know about this BLS data release and how it could impact crypto markets.

1. Possible downward revision of employment growth

The BLS report, which covers the period from April 2023 through March 2024, is expected to paint a grimmer picture for the U.S. economy than previously thought, with slower job growth looming. But leading investment banks warn that the data could be misleading and overstate economic weakness.

2. Misleading data warnings

Goldman Sachs warns that the downgrade could be misleading. The bank’s Economics Research team said:

“While next week’s revision could lower the pace to 165-200,000 per month, we believe some of that revision will be wrong and that the ‘real’ pace of employment growth over that period was likely closer to 200-240,000 per month.”

3. Possible market reaction

The revelation of weaker job growth could reignite recession fears, potentially sparking a shift road risk assets, including crypto. This reaction would mirror the market behavior seen after the July jobs report released earlier this month.

4. Significant reduction in the number of employees

Morgan Stanley, a multinational investment bank and financial services firm, is forecasting a substantial downward revision to payrolls, estimating a reduction of 600,000 jobs based on current reports. This implies a reduction of about 50,000 jobs per month over the 12 months through March.

5. Disclosure of Federal Reserve Minutes

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

“We will examine why the FOMC wanted to wait until September to consider easing monetary policy and whether a 50 basis point rate cut was discussed.”

The combination of potentially misleading economic data and insights into the Federal Reserve’s monetary policy deliberations could create a complex trading environment for crypto markets. While initial reactions may be bearish if jobs data appears weak, savvy market participants can look beyond the headline numbers to assess the true state of the U.S. economy.

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

Share this article