As the labor market shows little signs of cooling down, this week’s top economic events hold significant importance for investors and policymakers alike. The minutes of the mid-June Federal Reserve (FED) meeting will be published, shedding light on the central bank’s future policy decisions. Additionally, the eagerly anticipated Non-Farm job report will provide insights into the health of the U.S. economy.
These events take place amidst a backdrop of businesses filing for bankruptcy and concerns over high inflation. Let’s delve into the details.
FED Meeting Minutes
On Wednesday, July 5, the minutes of the mid-June FED meeting will be released as one of the top economic events this week. Despite minimal market movement following previous minutes’ releases, this time may be different. FED Chair Jerome Powell has consistently expressed his belief that the central bank needs to raise interest rates by at least 0.5% twice more this year. The market will closely scrutinize the minutes for any hints about the Fed’s future course of action.
Non-Farm Job Report
Scheduled for Friday, July 7, at 12:30 PM UTC, the Non-Farm job report is highly anticipated. Forecasts predict the addition of over 200,000 jobs, down from the previous month’s 339,000. Although the unemployment rate remained at 3.7% last month, it has yet to rebound. This report is particularly crucial as it serves as the last jobs report before the interest rate news expected in July.
In addition to the Non-Farm job report, several employment reports will be released on the evening of July 6. These include the ADP employment report, JOLTS (Job Openings and Labor Turnover Survey) data, and the number of first-time jobless claims. All three reports are forecasting a decline in the labor market in June.
Bankruptcies and Economic Outlook
The data from S&P Global reveals a concerning trend in business bankruptcies. From the beginning of the year until June 22, 324 U.S. businesses filed for bankruptcy, nearly equaling the total for the entire year of 2022. Notable bankruptcies include Monitronics International, SVB bank, Bed Bath & Beyond retail chain, and Diamond Sports sports chain. Experts predict a continued increase in defaults, with a peak expected by April 2024.
The FED’s Stance
FED Chair Jerome Powell continues to advocate for a “Higher for Longer” approach, maintaining high-interest rates to address the risk of inflation. Recent strong economic data prompted the Fed to revise its 2023 forecast. Several members of the Federal Open Market Committee (FOMC), known as “hawks,” still support raising interest rates to approximately 5.5-5.75% for 2023.
The unemployment rate is expected to decrease further to around 4.1%, while PCE (Personal Consumption Expenditures) inflation is projected to decrease overall but increase for core PCE. The GDP growth forecast stands at 1%, indicating the Fed’s belief that a recession is unlikely in 2023.
Impact on Cryptocurrency
The labor market, business bankruptcies, and inflation concerns do not directly address the implications for cryptocurrencies. However, it is worth noting that major economic events can often trigger volatility and market reactions across various asset classes, including cryptocurrencies. Investors may seek alternative investment opportunities, such as cryptocurrencies, in times of uncertainty or as a hedge against inflation. Therefore, it is advisable for crypto enthusiasts and investors to closely monitor the market sentiment and news developments surrounding these economic events to gauge any potential impact on the crypto market.
This week’s economic events, including the release of the Fed meeting minutes and the Non-Farm job report, are critical indicators for the U.S. economy. As businesses face financial stress and concerns over inflation persist, the Federal Reserve’s decisions regarding interest rates will be closely watched. Investors and policymakers will scrutinize the data to gain insights into the health of the labor market and the overall economic outlook.