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[Bitop Review] US Labor Market Slowing, Sahm Rule on the Verge, Crypto Market Falls.

2024年07月08日发布

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US Labor Market Slowing, Rate Cut Expectations Resurging


Data suggests the US labor market has entered a recession.


The US reported that non-farm payrolls increased by 206,000 in June, above market expectations of 191,000. This may seem optimistic on the surface, but a closer look at the revisions to non-farm payrolls for the previous two months shows a staggering downward revision of 111,000, indicating a sharp cooling in labor demand and a significant increase in market expectations for a Fed rate cut. At the same time, the US unemployment rate rose again last month, from 4.0% to 4.1%, above market expectations, and average hourly wage growth also cooled to 3.9%.


In addition, the number of initial jobless claims in the US last week was 238,000, also above the market expectation of 234,000.

All signs point to a very pessimistic employment situation in the US. The 10-year yield collapsed by more than 20 basis points this week, from near 4.50 to 4.27, and the US market is closed for holidays on Thursday. If not for the July 4th US Independence Day, rates would have probably fallen at least 30 basis points.

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Sahm Rule on the Verge


The Sahm Rule is getting dangerously close to being triggered. This indicator, which has 100% predicted economic recessions in the past, clearly indicates that the US has entered a recession and that the Fed will be forced to cut rates within three months; at the latest, it will definitely cut rates in September.


The Sahm Rule, proposed by economist Claudia Sahm, is an indicator used to signal a US recession. The accuracy of the indicator is astonishing: it has been validated in all 11 US recessions since 1950.


Sahm Recession Indicator signals the start of a recession when the three-month moving average of the national unemployment rate (U3) rises by 0.50 percentage points or more relative to its low during the previous 12 months.

The current Sahm Rule reading is 0.43%, and if the unemployment rate rises by just 0.1% in July, it will exceed the Sahm Rule's 0.5%.

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Crypto Market Falls. Fear Spreads Rapidly.


A starkly different atmosphere from the US stock market is palpable in the crypto market this week. Bitcoin has fallen below its two-month low, altcoins are bleeding, and the Fear and Greed Index has plummeted to its lowest level in history. A combination of factors, including the start of Mt. Gox payouts, the German government's continuous small-scale selloffs, and the drain from the stock market's AI sector, has led to a rapid spread of fear.


After hitting a low of $53,485 last Friday (5th), Bitcoin rebounded over the weekend and briefly broke above $58,000 yesterday (7th). However, selling pressure then emerged and the price began to fluctuate and fall. After 5 am this morning (8th), the price continued to plummet significantly, falling below $54,500 around 9 am.

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As of this writing, Bitcoin is trading at $55,760, down 3.4% in the past 24 hours and 11.93% in the past seven days, erasing almost all of the gains of the past two days. Ethereum's performance is similar, falling below $2,850 around 9 am this morning and currently trading at $2,930, down 3.41% in the past 24 hours and 15.9% in the past seven days.


After a period of intense declines, the crypto market is unlikely to see a V-shaped recovery in the short term unless there is significant positive news. According to market inertia, after a sharp decline, it often takes time for prices to fluctuate and for the market to digest this kind of panic. Therefore, readers who want to make spot positions may not need to rush into the market.

 

 

Disclaimer: None of the information contained here constitutes an offer (or solicitation of an offer) to buy or sell any currency, product or financial instrument, to make any investment, or to participate in any particular trading strategy.