The markets are ignoring a warmer inflation report than expected and, instead, directing their attention to the latest signs that the United States labor market is hesitating, a change of approach that points to growing concern about a deeper economic slowdown.
Consumer prices increased a little more than expected in August, according to IPC data published Thursday by the United States Labor Statistics Office. Both the main rate of 2.9% and the central rate of 3.1% remain solidly higher than the 2% target of the Federal Reserve. Normally, that would suggest that the Central Bank of the United States must suspend the cuts of interest rates.
But investors barely shuddered in the data and, on the other hand, focused on what are generally the weekly unemployment claims less followed by the Labor Department. These data showed that the statements rose to 263,000 last week, the highest in almost four years and compared to 236,000 the previous week and 235,000 forecasts. This approach was reflected in the yields of the bonds, with the 10 -year treasure yield that slid five basic points below 4% for the first time since the panic of the April rate reduced the global capital markets.
The cryptographic markets initially fell into the fastest inflation data than expected, but quickly recovered as the employment data took the center of the stage. Bitcoin and ether (Eth) They are only modestly higher, but the biggest action is in Altcoins, which suggests the type of animal spirits that one could associate with monetary policy about to be much easier. Solarium It has increased 11% rear week to its highest level since January and Dogecoin 17% weekly. XRP It is ahead 6.6% during the last week and back over $ 3.
“The evidence of a slowdown in the United States now appears in hard data; it is no longer only in feelings surveys,” said Brian Coulton, chief economist of Fitch.
As for the real economy, today’s numbers offer a worrying vision of something that the United States Central Bank has been working hard to avoid: Stagflation. This economic condition, defined by the simultaneous occurrence of high inflation and stagnant growth, is rare and difficult to solve. For policy formulators, it is a CATCH-22.
Reduce interest rates to stimulate inflation risks. But the lack of relief of monetary policy, while the employment situation deteriorates is not a much better alternative.
For now, merchants are betting that the Fed will incline towards the protection of growth on inflation elimination, and probabilities point to a rate cut next week as a nearby certainty. However, today’s data suggests that balance is becoming more difficult to administer and that the road ahead can be more complicated than the market.
“It will be difficult months as impact tariffs are made on their way through the economy,” said Heather Long, federal chief economist Credit Union. “Americans will experience higher prices and (likely) More dismissals. “
