Jobs Data, Celsius Lawsuit And Mt. Gox BTC
Markets sell off as U.S. June jobs numbers beat expectations. KeyFi files a major lawsuit against Celsius. Mt.Gox-recovered bitcoin gets closer to being released.
In today’s issue we have three different sections to cover: the market’s reaction to the latest U.S. jobs data this morning, a lawsuit filed against Celsius last night detailing inner workings of the company and the latest on the 142,000 bitcoin from Mt. Gox to be repaid to creditors.
Good Jobs Data Is Bad News
After what looks like a bear market rally taking over for broader risk assets and bitcoin this week, the markets sharply reversed on good economic news: 372,000 jobs were added in June versus expectations of 265,000 and an unchanged unemployment rate at 3.6%. May was also a positive-surprise month for jobs, beating consensus expectations.
However, this is “good news is bad news” for the market because now expectations of Federal Reserve rate hikes are rising. The Fed has been clear in their messaging that they need unemployment to rise and labor demand to turn over as a result of their attempt to curb inflation. Although a lagging economic indicator, the jobs data will give more confidence to hike at 75-bps moves as the Fed is reactive, not proactive. Jerome Powell has mentioned that an unemployment rate above 4% “will still be very strong.”
The market looks to be reflecting those concerns, with rising rate expectations and falling prices of risk assets in the immediate move after the release this morning. Both SPX and bitcoin fell sharply while eurodollar futures implied Fed funds rate for December 2022 moved up 12 bps. That may not completely stop the latest rally but it gives us glimpses on how monetary policy expectations are changing.
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