Fed Swaps Push Rate Cuts to September; Crypto Market Saw $300M Liquidation

The stronger-than-expected jobs report released by the U.S. Bureau of Labor Statistics raised concerns among stock and crypto market investors. Fed swap now indicates rate cuts in June and July are off the table and the U.S. Federal Reserve can start rate cuts in September. CoinGape earlier reported the same timeline.

Fed Rate Cuts in September After Strong Jobs Data

Rate cut bets now show September is fully priced, rather than July. So, the initial take from the swaps market is that the Fed has more time to sit on its hands and wait for inflation to cool further. All CPI, PPI, and PCE inflation came in hotter in the latest release.

*FED SWAPS SHIFT FULL PRICING OF RATE CUT TO SEPTEMBER FROM JULY

— zerohedge (@zerohedge) April 5, 2024

US economy remains resilient as it added 303K jobs in March 2024, which is highest in ten months, compared to a downwardly revised 270K in February and market estimates of 200K. Unemployment rate also missed market estimates and fell from 3.9% to 3.8%. This indicates the US jobs market remains strong enough and gives more time for the Fed to decide cutting interest rates.

US stock edged high with the S&P 500 rising 0.4%, the Dow Jones adding 50 points and the Nasdaq gaining 0.5%. Bitcoin price briefly slipped below $66,000 after the strong jobs report.

The US dollar index (DXY) climbed over 104.60 as data indicated tighter labor market. Federal Reserve officials, including Neel Kashkari and Jerome Powell emphasized the need for more inflation data before considering any rate cuts. Powell stated that the Fed will require additional evidence of inflation stabilizing at the 2% target before adjusting rates.

Moreover, the US 10-year Treasury yield also increased to 4.4%, its highest level since November. Bitcoin moves in the opposite direction to DXY and the 10-year treasury yield. 2-year treasury yields also jumped to 4.702% suggesting that the Fed can remain patient as the jobs market remains robust.

On the other hand, the CME FedWatch Tool indicates a 58% probability of 25 bps rate cuts in June and 51% in July by the Federal Reserve. September data indicates an overall 50 bps decrease in interest rates.

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CME Data More Crucial Than Bitcoin Halving for BTC Upsurge

U.S. Bureau of Labor Statistics to release Consumer Price Index (CPI) data for March, which analyst Markus Thielen believes is more crucial than Bitcoin halving. The CPI rose by 3.2% year-over-year in February, following a 3.1% increase in January and slightly exceeding the market consensus of 3.1%. CPI data release next Wednesday, April 10 is crucial as PCE and PPI data also came higher recently.

Meanwhile, as of writing, BTC price plunged below $66K and rebounded to $68,000. This upsurge is limited as options traders push bets to keep price above max pain point. However, QCP Capital expects a rebound above $70K by this week. On the other hand, the ETH price jumped 2% in last few hours to $3,303 but remains below max pain point of $3,400.

Coinglass data indicates nearly $300 million in crypto liquidations, with over 90K traders liquidated in the last 24 hours. The largest single liquidation order of ETH-USD-SWAP valued at $6 million happened on crypto exchange OKX.

Shorts liquidations happened in the last few hours, indicating buying across the crypto market. However, $190 million in crypto were liquidated before the recent buying activity.

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