Bitcoin Could Rise Further After U.S. Jobs Data — Market Talk

1058 ET - Bitcoin stands to benefit from improved risk sentiment after Friday's stronger-than-expected U.S. nonfarm payrolls report, 21Shares crypto strategist Matt Mena says in a note. The data highlights the resilience of the labor market, alleviating fears of an imminent recession and boosting risk sentiment, he says. "This favorable economic backdrop serves as a significant tailwind for bitcoin, which tends to thrive in an environment of growing investor confidence." The data could provide the momentum needed for bitcoin to return above $100,000 again and surge past last year's record high. Bitcoin rises nearly 2% to $93,921, according to LSEG. It reached a record high of $108,379 on December 17.([email protected])1045 ET - A January rate cut by the Bank of Canada still makes sense after strong job gains to end 2024, suggests Manulife Investment Management's Dominique Lapointe. The director of macro strategy says the data may have seen distortion to employment and hours worked thanks to the end of the Canada Post and maritime port strikes. Lapointe still expects the central bank will cut a quarter percentage point Jan. 29, by when it may have additional details on U.S. tariffs. ([email protected]; @RobbMStewart)1043 ET - Progress on inflation and "some softening" of labor markets are needed for the Fed to cut again, AllianceBernstein's Eric Winograd writes, adding it could take several months. A rate raise, however, is unlikely, since there have been no signs of reacceleration of inflation, he says. Beyond the strong headline figures, the three-month moving average gain in payroll employment is unchanged from November, Winograd says. He also notes that the unemployment rate, which ticked lower to 4.1% from 4.2%, "has been between 4.0% and 4.2% for the last 7 months." Winograd sees "no reason to expect anything but the soft landing we are currently enjoying." ([email protected]; @ptrevisani)1034 ET - The strong pace of hiring in Canada in December provides more evidence that aggressive Bank of Canada rate cuts in 2H of 2024 are starting to lift economic activity, says Doug Porter, chief economist at BMO Capital Markets. He adds the solid report may cast doubt on whether the BOC delivers another rate cut later this month. Net employment rose by nearly 91,000 and the unemployment rate fell to 6.7%. Porter says the BOC would also welcome data showing annual wage growth decelerating, to 3.8%, or the slowest advance since May, 2022 and within shouting distance of sub-3% prepandemic trends. Porter notes Canada's monthly jobs data are unusually volatile, and the Trump tariff threat is likely weighing on investment activity. ([email protected]; @paulvieira)1033 ET - December's jobs report shows that "a majority of industries experienced at least some job growth in December," Indeed Hiring Lab's Cory Stahle writes, noting gains were largely concentrated in healthcare and social assistance, leisure and hospitality, and government. He says that employers added roughly 2.6 million jobs last year, down from 3 million in 2023. "While job gains are more moderate now than a few years ago, they still exceed the approximate 100,000-job clip needed to keep up with population growth-an encouraging sign of resilience." ([email protected]; @ptrevisani)1031 ET - Canada's labor market ended the year with a bang, but since it remains loose and inflation is running below the Bank of Canada's 2% target it remains likely the central bank remains on track to cut rates a smaller quarter percentage point this month, Oxford Economics' Michael Davenport reckons. The economist cautions against over reaction to one month of jobs data and sees room for the jobless rate to rise in early 2025. Still, he says the detail of the December report were mostly encouraging, with the strong job gains concentrated in full-time positions, the employment-to-population ration rising for the first time in almost two years, and wage growth cooling. ([email protected]; @RobbMStewart)1029 ET - Canada's labor market in December was clearly firmer than expected, with headline numbers and details broadly better than feared. Still, the data is notoriously volatile, and the jobless rate is still almost a percentage point up on a year and at its second highest level since 2017, excluding the height of the pandemic, Royal Bank of Canada's Nathan Janzen notes. The economist still thinks it is unlikely the upward trend in unemployment has ended, with hiring demand still well below year-ago levels. Janzen adds the Bank of Canada is looking at a more gradual pace for rate cuts, but ultimately is still is expected to cut this year. ([email protected]; @RobbMStewart)1009 ET - Gold prices gain further in afternoon trade amid uncertainties over the impact of future U.S. policy on the economy and inflation, even after the latest jobs report supported the case for a slowdown in interest-rate cuts. Futures are currently up 1.1% to $2,720.10 a troy ounce and on track for weekly gains of roughly 3%. U.S. jobs growth beat expectations in December while the unemployment rate unexpectedly fell, reinforcing expectations of fewer rate cuts in coming months. The U.S. dollar index, which measures the currency against a basket of major U.S. trading partners, is up roughly 0.4 percent. Higher interest rates and a stronger dollar typically reduce gold's appeal, but the yellow metal also acts as an inflation hedge and a safe-haven investment. ([email protected])1010 ET - Higher borrowing costs are starting to look at least a bit threatening to the economy's resilience in 2025, Brent Donnelly of Spectra Markets writes. "What a toxic combination of risk premium, sticky inflation, and stronger-than-expected jobs for the bond market," he writes as yields rise following a December hiring surprise. Donnelly argues that because they offered investors higher returns on cash, the Fed's recent rate hikes were perhaps even stimulative over the past couple years, but he suspects that could change going forward. Increasingly, more businesses and households are going to be facing the music of higher borrowing costs. "Corporates are going to need to roll some debt," he writes. ([email protected], @mattgrossman)1003 ET - U.K. sovereign credit default swaps, which insure against the risk of default, stabilize Friday as U.K. gilt yields stay below Thursday's historically high levels. The five-year U.K. CDS stays at 24 basis points, a level reached Thursday. This marks the highest since August although it remains well below levels above 30 basis points a year ago, S&P Global Market Intelligence data show. Gilts remained under pressure on Friday, but stayed below the highs reached Thursday when the 30-year gilt yield rose to 5.474%, the highest since 1998, while the 10-year yield increased to 4.921%, unseen since 2008. Inflation concerns, gilt supply and positioning are causing gilt yields to rise by more than Treasury yields, Bank of America analysts say in a note. ([email protected])0954 ET - A small drop in the wage growth rate in December is "probably the one positive" of December's jobs report, says Danny Zaid, of TwentyFour Asset Management. Average hourly earnings grew 3.93% over a year earlier, compared to 4% in November and the lowest since August, when it was 3.83%. That corroborates Fed officials' evaluation that labor markets are no longer a major driver of inflation, Zaid says. "If you see that go higher, that's going to put pressure on overall inflation and it just complicates the Fed's inflation mandate," he says. "For the time being, they can certainly afford to be patient here." ([email protected]; @ptrevisani)0952 ET - The better-than-expect Canadian employment data for December, which includes a 0.5% increase in hours worked, indicates that 4Q growth is going to surpass the Bank of Canada's forecast, says economist Royce Mendes at Desjardins Group. The BOC had forecast 2% annualized growth in 4Q, but Mendes says the firm's tracking indicates that output in the final 3 months of 2024 was closer to 2.5%. Still, Mendes expects BOC to cut rates later this month, due to a still elevated unemployment rate; which dropped to 6.7%; a deceleration in wage growth; and the hit to business confidence from the threat of a 25% tariff on all of Canada's US-bound exports as pledged by President-elect Trump. ([email protected], @paulvieira)