How Bitcoin Could Be Affected by February’s Positive Jobs Report

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U.S. jobs rose 379,000 in February, well above the general consensus of 185,000 to 200,000 jobs, which was far better than the January or December report.

The US added a revised 117,000 of the 105,000 expected jobs in January and lost a revised 306,000 in December. In February the unemployment rate fell from 6.3% to 6.2%.

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The positive report could lead to more volatility in the US treasury market, David Beckworth, a former international economist at the US Treasury, told CoinDesk.

Bond yields rose to 1.5% on Thursday after Federal Reserve Chairman Jerome Powell announced that the economy would experience temporary inflation if it reopened. The rate rose further to 1.61% after Friday’s job report was released.

Given the market’s sensitivity to the interest rate outlook, it is possible that risky assets (like bitcoin) could be sold as the job report exceeds estimates, said Steven Kelly, a research fellow with Yale’s financial stability program.

The Fed is unlikely to pull back on quantitative easing or raise rates in response to volatility in government bond yields, Kelly added, but it could consider controlling the yield curve or an Operation Twist.

The Fed would have to see “material unintended consequences of QE” to reverse its $ 120 billion monthly bond purchase, Kelly said. For now, Bitcoiners can still rely on the Fed to bring more liquidity to the markets and give investors the liquidity to invest more in riskier assets.

“Part of QE isn’t just about lower yields,” said Kelly. “It’s about encouraging the search for income to some extent. This is often cited as a disadvantage of QE’s financial stability, but it’s also part of the point – it’s about preventing a flight to safety. ”

Pandemic industries are returning

The largest increase in jobs has been in the service sectors hardest hit by COVID-19. The leisure and hospitality industry grew 355,000 in February.

“We have an economy that is on the brink of setback,” said former Federal Reserve macroeconomist Claudia Sahm on Thursday. “This is still not the mission accomplished; 10 million jobs are still missing. “

The employment-to-population ratio, which measures the number of employees in relation to the total working-age population, changed only slightly from month to month at 57.6%, a decrease of 3.5 percentage points compared to the previous year. State and municipal education, construction, and mining employment declined, with municipal education losing 37,000 jobs and state education losing 32,000 jobs.

Actual employment growth could be higher since the Bureau of Labor Statistics poll was released three weeks ago, Sahm added. Vaccinations have increased significantly since then – U.S. President Joe Biden announced this week that there will be enough vaccines to supply all Americans by the end of May, two months ahead of earlier estimates.

The additional jobs are not insignificant, but should not affect the business cycle negotiations, added Sahm. That means there will soon be between $ 1.5 trillion and $ 1.9 trillion in relief bills for Americans (depending on the negotiations), she said.

Update (March 5th, 3:02 pm UTC): Adds additional details from the job report and comments from experts.