US Economic Indicators Deliver a Perfect Storm for the Fed and Cryptos

Key Insights:

• After four consecutive sessions in the red, the crypto market targets an upward swing on easing fears of a US economic recession.
• US economic indicators delivered riskier assets with a perfect storm.
• Jobless claims and Philly Fed Manufacturing beat forecasts to side-line existing home sales figures.

On Monday, Chinese and US economic indicators sent riskier assets into reverse. Economic data from China delivered a reality check, with manufacturing numbers from the US also pointing to a global recession.

Bitcoin (BTC) retreated from the $25,000 handle, with the total crypto market cap losing over $50 billion from the August high.

Investor sensitivity to economic indicators placed greater emphasis on today’s US jobless claims and Philly Fed manufacturing numbers.

Jobless Claims and Philly Fed Manufacturing Ease Fears of a Recession

In August, the Philadelphia Fed Manufacturing Index climbed from -12.3 to +6.2. Economists forecast a more modest increase to -5.0. The stats provided relief following the disappointment of Monday’s NY Empire State Manufacturing numbers which slid from 11.1 to -31.3 versus a forecasted +5.5.

Jobless claims were also upbeat for the week ending August 12. Initial jobless claims slipped from 252k to 250k versus a forecasted 265k. Significantly, the decline was the first since the week ending May 20.

Immediate Crypto Market Reaction Was Modest Despite the Positive Stats

While the numbers were crypto-market-friendly, a rebound in manufacturing sector activity and improving labor market conditions could give the Fed the option to deliver another 75-basis point rate hike in September.

Following the release of the FOMC meeting minutes on Wednesday, investor sentiment was mixed. However, the latest non-farm payroll, service sector PMI, inflation, retail sales, and Philly Fed numbers support another sizeable hike, which weighed on the broader crypto market.

Ninety minutes after the manufacturing and jobless claims figures, housing sector data also disappointed. In July, existing home sales fell by 0.4%, following a 0.7% decline in June.

In response to the jobless claims and manufacturing numbers, the total crypto market cap rose to a high of $1,103 billion before falling to a post-stat low of $1,095 billion. The housing sector numbers also weighed, leading the total market cap to a low of $1,094 billion before finding support.

However, looking at the crypto top ten, the stats failed to have a material impact, despite the NASDAQ 100 kicking off the day in negative territory.

BNB (+0.52%), BTC (+0.57%), DOGE (+1.02%), ETH (+1.21%), and SOL (+0.92%) were all in positive territory. However, XRP and ADA bucked the trend, falling by 1.04% and 0.19%, respectively.