FOMC/Fund rate and high impact data.
I know i posted about this a couple days ago but i cant stress enough how important tomorrow is for Crypto price.
There is no neutal outcome tomorrow, it will either be very Bullish or very Bearish.
The current BTC price is $65 730, i think based on what happens tomorrow it will either hit $70k or $60K tomorrow or in the coming days.
You have no control over this, please dont try predict it, you should strongly consider closing all high leverage and margin trades before tomorrow.
Lets break down Bullish and Bearish scenarios for tomorrow.
ADP non farm change,
This will have a slightly Bullish effect if this reading is above 147k, the labour market is a worry for recession, if this number comes out far lower than expected it will be bearish as this will further fuel recession fears, this data will matter but the higher impact unemployment data comes out on Thursday-Friday.
Employment cost q/q
This will be used to signal inflation, higher employment cost is passed onto consumers, this should be around the 1.0% and wont have as much effect as other readings tomorrow.
Pending home Sales
Pending home sales is a forward looking indication so it is extremely important to gauge future economic health, pending home sales are counted when the contract is signed, the sale of a home effects a large part of the economy, financing cost, morgages, renovations.
The pending home sales have fallen over the last 2 readings(-7.7% and -2.1%) , another bad reading would definitely be bearish, the housing market like the labour market are key indicators used to signal a possible recession.
Tomorrow this reading needs to come out above 1.4% to be Bullish, the higher the reading and the more bullish it will be.
The main event, Funds rate and FOMC press conference.
How this could be Bullish,
If the Fed lowers rates tomorrow this will have an instant bullish effect on the crypto market, it is extremely unlikely as the Fed does not like to spook the market, it would also go against Trumps request(it was more of a warning).
At the time of writing a chance of a Cut is priced at 4.1% on Cme FedWatch, this shows it is extremely unlikely but some are still pricing in the possibility.
The Fed could keep rates at 5.5% and tomorrow could still have a Bullish outcome,
If earlier readings in the day point to a stengthening/stable labour market and housing market this will be the first thing needed for bullish momentum.
Most important is what is said at the Fomc press conference,
If Powell gives clear indication that they will start making cuts in September and plan on 2-3 cuts before the end of year, this will be Bullish, the market expects at least a clear indication of a September cut, if Powell gives indications of a larger cut in September(-50bps) this will increase the bullish effect.
What scares me is the bearish scenario!
The Bearish scenario,
If the labour market readings and home sales data get worse it is getting closer and closer to an imminent recession, as noted the most important labour data comes out on Thursday and Friday.
What scares me most about tomorrow is that the Fed keeps rates at 5.5% and then gives no clear indication of a September Cut.
I dont see how the Fed could possibly do this, what scares me is the political agenda, the "Trump effect"
The stock market and even the crypto market have priced in a September cut, if no clear indication of this is given tomorrow(Should rates be held at 5.5% for July) it will have an extremely bearish effect on crypto price.
Under normal circumstances i would say it is a certainty that Powell would give clear indication of a September cut at very least tomorrow.
With what is happening around this election i think anything is possible, more so because Trump has told Powell to hold rates.
Powell and the Fed should not be swayed by Trumps comments, the US economy is suffering, especially lower income consumers and small businesses.
If Powell does this tomorrow it will be economic self sabotage, nothing less, not for the rich who will be able to weather the storm but for the low income families and small businesses.
Some things to note about the US economy, Powell knows this also👇
I copy and pasted this from a bloomberg article about how interest rates have effected the economy in the last year.
Small businesses,
"The picture is much different for smaller businesses. The default rate on leveraged loans, which typically have variable rates, is projected to rise to a range of 5% to 5.5% this year, according to forecasts from Fitch Ratings. If realized, that would be the highest level since 2009. "
Credit card debt,
" Interest rates for credit cards rose to 22.76% in May, just shy of a record in data back to 1994, Fed data show. Some 2.6% of credit card balances were 60 days past due in the first quarter, reaching a series high in data from the Philadelphia Fed that goes back to 2012. "
Labour market,
"The number of people who have been out of work for 27 weeks or more, known as long-term unemployed, rose to 1.5 million in June, the most since 2017 with the exception of a temporary spike during the pandemic, said Aaron Terrazas, chief economist for Glassdoor.
Hiring has become more concentrated to just a few sectors — like healthcare, social assistance and government — a sign that other industries more vulnerable to economic slowdowns are starting to pull back, he said.
Taken together, the figures raise concerns that the job market could weaken unexpectedly, a turn that would put the overall economy at risk"
Stock Market,
"The S&P 500 has climbed about 25% since the Fed started raising rates in March 2022, adding about $3 trillion to household wealth.
If the Fed doesn’t start lowering rates soon, however, “the market’s going to be vulnerable,” said Mark Zandi, chief economist for Moody’s Analytics. It’s “embedded in current stock prices that investors expect rate cuts.”
Housing Market,
"With mortgage rates hovering around 7%, the monthly mortgage payment for someone buying a median priced home climbed to $2,291 in May, up from $1,205 three years earlier, according to the National Association of Realtors.
Economists expected sales to decline in response to the higher borrowing costs — and they did. “What was unexpected is how powerful the lock-in effect can be if the economy is not in a recession,” said Ralph McLaughlin, senior economist for Realtor.com."
Back to me 🤪,
I included all of the above because it shows an economy that is stuggling, especially lower income families and small businesses, it is the Feds job to act in the best interest of all Americans, the decisions and the implifications of those decisions will have huge impact on the market and the American people.
It is obvious what the Fed should/needs to do, whether or not they will do so or be swayed by political agenda will be seen tomorrow.
Tomorrow is going to be incredibly volatile, please trade safely.
Peace.
#TheWolfThatWins #US_Job_Market_Slowdown #Market_Update #fomc
