October Job Growth Falls Short; Bitcoin Holds Steady at $34.3K

Recently, interest rates in the United States have experienced a significant decline along the yield curve, as traders speculate that the Federal Reserve has concluded its tightening of monetary policy.

In October, the U.S. added 150,000 jobs, falling short of economists' expectations of 180,000 and a drop from September's 297,000. The unemployment rate rose to 3.9%, compared to forecasts of 3.8% and the previous month's 3.8%. Notably, there were downward revisions to the job gains reported in both August and September, totaling 101,000.

Following the release, Bitcoin (BTC) maintained its lower position at $34,300.

Examining further details from the report, average hourly earnings saw a 0.2% increase in October, falling slightly below estimates of 0.3% and September's 0.3%. On a year-over-year basis, average hourly earnings rose by 4.1%, surpassing the expected 4.0% and slightly lower than September's 4.3%.

Over the past two weeks, the U.S. bond market has experienced a swift turnaround, transitioning from a state of anxious selling to the belief that the Federal Reserve's rate hikes have concluded for this cycle. This shift has created an environment conducive to reintroducing fixed income to investment portfolios. After surpassing 5% on October 19, the yield on the 10-year Treasury note had fallen back to 4.64% before this jobs report. Similarly, the yield on the two-year Treasury note has seen a comparable decline, yielding 4.97% ahead of the report.

The decline in yields has provided a boost to stocks, which have rebounded from a slump that began in late July. Both the S&P 500 and Nasdaq have gained approximately 5% in recent sessions. Bitcoin has seen a similar upward trend. While the recent surge in the cryptocurrency's value has been attributed to the potential approval of a spot ETF, falling interest rates may also rekindle investor confidence in risk assets like stocks, potentially benefiting Bitcoin as well.

Following the release of the report, futures for U.S. stock indices have shifted from negative to positive, with the S&P 500 and Nasdaq each showing gains of about 0.45%. Meanwhile, Treasury yields have experienced a further decline, with the 10-year yield dropping by 12 basis points to 4.54% and the 2-year yield decreasing by 10 basis points to 4.87%. The CME FedWatch tool indicates that the likelihood of a rate cut as early as March 2024 has risen to 20%, compared to just 13% prior to this morning's data release.

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