Weak US jobs report shifts odds of September Fed hike; rates likely steady
The US jobs report for July came in weak and forced a rapid repricing of Federal Reserve policy expectations. Nonfarm payrolls showed job cuts of 23,000 versus forecasts for about 80,000 new jobs.
In the hours after the release, the probability of a September rate hike fell from around 57% to 43.9%. At the same time, the odds of the Fed holding rates in the 3.5%–3.75% range rose to nearly 60%.
Key labor details added to the softening picture. Prior months’ employment data were revised down by a combined 103,000 jobs, suggesting the labor market was weaker even before the July contraction. The unemployment rate edged down from 4.2% to 4.1%, while wage growth stayed roughly flat at about 3.2% year-over-year.
Policy context matters. The Fed is already divided. At the July 29–30 meeting, the FOMC voted to hold rates but with significant dissent, reportedly along 9–3 or 10–2 lines. Fed Chair Kevin Warsh is described as an inflation hawk, alongside Governor Lisa Cook emphasizing price stability.
For traders, the rate path implied by the jobs data is the main driver. A Fed that holds steady—or signals possible future cuts—tends to support risk assets, including crypto. Markets may focus less on the headline jobs miss and more on the downward revisions, because a weaker baseline can raise the threshold needed to justify a future rate hike.
Bullish
This news is likely bullish for crypto because it pushes rate-hike expectations lower. When the market moves toward a “hold rates steady” or “possible future cuts” scenario, it reduces the opportunity cost of holding non-yielding assets like BTC and often improves liquidity conditions for risk assets.
Short term, the reaction typically comes from rates repricing in bond markets and expectations of less restrictive Fed policy. The article highlights that the probability of a September hike dropped sharply (57% to 43.9%) while the “hold” scenario rose to nearly 60%. That kind of shift has historically supported rallies in BTC and other liquid crypto when macro data points away from inflation pressure.
The revisions matter too: prior-month job cuts of 103,000 jobs lower the baseline for economic momentum. Traders may therefore expect the Fed to stay cautious longer, which can extend the tailwind if subsequent inflation or employment prints don’t re-accelerate.
Longer term, the risk is that the Fed could still turn hawkish if inflation re-heats or if future labor data stabilizes. Also, the Fed is described as divided, which increases the chance of volatility in rate guidance. Still, based on this specific jobs shock, the immediate macro signal is supportive for crypto market stability and upside bias.