Asset prices reflected a lively mood Wednesday with Bitcoin To recover $ 112,000 and European stocks rising into the open air as analysts increasingly neglected fear of stagflation and recession triggered by terrible US job data.
On Tuesday, the US Bureau of Labor Statistics published a shocking update: The economy probably added 911,000 fewer jobs than originally reported in the 12 months through March 2025.
Think about it this way: For over a year, equity and crypto-market-rich risks, with confidence that a healthy labor market would keep the economy going despite sticky inflation. This confidence was shaken on Tuesday and BTC quickly fell from $ 113,000 to $ 110,800.
Some market participants considered the BLS audit as evidence of an imminent recession. However, Michael Englund, main director and chief economist at Action Economics said, the data revealed very little about the business cycle or the economy.
“These revisions tell us more about the secular orbit for the size of the US workforce rather than where we are in the business cycle, so it really has not raised our perceived risk of recession, although it tells us that trend growth for monthly salaries is probably a two-groves, measured in a thousand, rather than a three-difference expansion, ”Englund said in an email to Coindesk.
He explained that the sharp growth of the US workforce Post-Covid, which surpassed economists’ expectations, was largely driven by an annual net immigration of about a million people. Now it has switched to the Net Committee, estimated between one and two million.
“This shift to a lower, secular growth path for the workforce involves slower growth in civil employment measured by household surveys and non -yard wages from establishment surveys in the future,” Englund said.
Financial markets seem to share this view as European shares opened higher today, with BTC back over $ 112,000. Altcoins like ether (Eth)XRP and Dogecoin Has deleted a significant potion of Tuesday’s drop. Meanwhile Solana’s Sun (Sun) Has jumped to $ 222, the highest since February 1st. The S&P 500 futures traded 0.3% higher, with European shares that sent gains at the open.
Stagflation fear is exaggerated
BLS -Revisions and the impending US CPI data, which is expected to show inflation pasted at about 3% (Good over Fed’s 2% target)has reintroduced fear of stagflation, a situation characterized by persistent high inflation combined with high unemployment and stagnant economic growth. Stagflation is largely seen as the worst result for risk assets, including Bitcoin.
However, fear that the economy is entering Stagflation seems excessive, according to Marc Chandler, CEO partner and head of the Bannockburn Global Forex market strategist, which noted that US GDP is still running over the Federal Reserve’s “Trendestimat” or a non-inflationary pace.
“I think stagflation is still exaggerated. Atlanta Fed Tracker still has GDP well over Fed’s Trendestimate, its non-inflationary pace.
Yes, inflation is a bit elevated and it will probably be more with the CPI pressure in August Thursday. However, bold officials, such as Waller and Bowman, want to look through customs-related climbs, “Chandler told Coindesk.
“It looks like me clearly that Fed will resume his easing course next week,” he added.
Dealers have a pencil in a 91% chance of bold cutting speeds with 25 basic points to 4% on September 17, according to CME’s FedWatch tool. Some investment banks and dealers expect a major cut at 50 basic point.
Focus on us cpi
These relief of expectations can further strengthen if Wednesday’s US Producer Price Index (PPI) And Thursday’s consumer prize index (CPI) Unexpected signalisflation, which would help risk assets remaining the short term.
That said, increased expectations could set the stage for disappointment.
“I think the CPI printing this week will give us more context … If the market expects 50bps points to be cut, but FOMC 17.
