Financial markets, including the cryptocurrency sector, could face major turmoil on Wednesday as the health of the U.S. economy comes under scrutiny with the release of the latest labor market data.
what happenedThe U.S. Bureau of Labor Statistics (BLS) is scheduled to release its revised preliminary estimates of nonfarm payrolls from April 2023 to March 2024, and the report could be a game changer for market sentiment.
but, Goldman Sachs GS As reported by CoinDesk, the firm urged caution, suggesting that the expected data may paint an overly pessimistic picture of the U.S. jobs market.
Investment banks have said the revised figures may have exaggerated the economy's weakness, which is a concern for investors who are closely watching the impact on risk assets like the FX rate. Bitcoin BTC/USD.
Upcoming BLS revisions are expected to reveal that job growth in the year through March was slower than initially reported.
Morgan Stanley MS They forecast a significant downward adjustment, estimating that payrolls could be revised down by up to 600,000, equivalent to a loss of 50,000 jobs per month over a 12-month period.
This expected decline could reignite fears of an impending economic downturn and spur a shift away from riskier investments, including cryptocurrencies, and towards safer assets.
The market's reaction is likely to mirror that to July's jobs report, which also stoked concerns about the economic outlook.
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Why is this important: Goldman Sachs cautions that these revisions don't necessarily tell the whole story.
“Nonfarm payroll growth from April 2023 through March 2024 averaged 250,000 per month,” Goldman Sachs' economic research team wrote in a client note on Aug. 16. “While Wednesday's revision could lower this pace to 165,000-200,000 per month, we believe some of that revision is incorrect and that the 'true' pace of job growth is more likely to be closer to 200,000-240,000 per month.”
The bank believes the potential inaccuracies stem from the data's reliance on the Quarterly Employment and Wages Consensus (QECW), which is based on unemployment insurance records.
Importantly, these records do not include undocumented immigrant workers, who have played a key role in job creation in recent years.
Following the release of the BLS data, attention will turn to the minutes of the Federal Reserve's July meeting, which will be released at 18:00 UTC.
These minutes are likely to provide further insight into the central bank's monetary policy strategy, with market participants keen to understand the reasons for the Fed's decision to wait until September before considering any easing measures.
“We examine why the FOMC waited until September to consider easing monetary policy and whether a 50 basis point hike will materialize.” [rate] “Rate cuts were discussed,” Morgan Stanley said in a separate client communication on Aug. 18.
As the financial world braces for these developments, the broader impact on crypto markets will be a key topic of discussion at Benzinga’s “Future of Digital Assets” event on Nov. 19.
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