Wednesday could be busy for financial markets, including cryptocurrencies, as lesser-tracked U.S. data is expected to provide a grim picture of the U.S. economy.
Still, bitcoin (BTC) bears might want to exercise caution, as the data could be misleading and overstate weakness, according to one leading investment bank.
On Wednesday, the U.S. Bureau of Labor Statistics (BLS) will publish a preliminary estimate of the benchmark revision to the level of monthly nonfarm payrolls (jobs report) from April 2023 to March 2024. The report is typically released in the summer or fall of every year.
According to observers, the impending BLS update will likely reveal job growth in the year to March was slower than previously estimated.
“On Wednesday, the Federal Reserve will receive revised job growth figures, which may reveal that job growth from last year through early this year was weaker than previously estimated,” SignalPlus, a tech firm focused on democratizing crypto options, said in Tuesday’s market update.
Morgan Stanley expects a large downward revision of payrolls to 600,000 lower than currently reported, “implying that they get trimmed by 50K per month in the 12 months through March.”
The expected large downward revision to jobs data could revive recession fears, triggering a shift away from risk assets, including cryptocurrencies, and a flight to safety as observed following the July jobs report released early this month.
That said, the downward revision could be misleading, according to Goldman Sachs.
“Nonfarm payroll growth averaged 250K/month over April 2023-March 2024. While next week’s [Wed’] revision could revise the pace down to 165-200k/month, we believe that a portion of that revision will be erroneous and that the “true” pace of employment growth during that period was probably closer to 200-240k/month, Goldman Sach’s Economics Research team said in a note to clients on Aug. 16.
The team explained that the data is based on the quarterly consensus of employment and wages (QECW), which takes cues from unemployment insurance records. The insurance records exclude illegal immigrants, who have contributed to strong job growth in recent years.
After the BLS data, the focus will shift to the minutes of the Federal Reserve’s July meeting scheduled for release at 18:00 UTC.
“We will look for why the FOMC wanted to wait until September to consider easing monetary policy and if a 50bp [rate] cut was discussed,” Morgan Stanley said in a note to clients on Aug. 18.
