JPMorgan: Fed Ready for October Rate Cut Amid Payroll Data Gap

The Federal Reserve can proceed with an interest rate cut in October, according to JPMorgan Chase’s chief economist. Private labor indicators provide enough insight despite missing non-farm payroll data, shaping positive market expectations across traditional and crypto sectors.

JPMorgan Chase reports that the Federal Reserve can cut interest rates in October despite missing non-farm payroll data, relying on private labor indicators.

The decision is significant as it underscores reliance on private data over government metrics, affecting market sentiment positively.

Chief U.S. Economist Michael Feroli indicates that the Federal Reserve can proceed with an interest rate cut in October even without complete non-farm payroll data. Private labor market indicators like ADP data provide a compelling basis for this decision. Jerome Powell, the Federal Reserve’s Chair, called the recent rate adjustment in September a “risk management cut.”

The equity and bond markets have reacted positively, anticipating lowered borrowing costs, while crypto markets are sensitively aligned with such macroeconomic shifts. The September rate cut led to a federal funds rate reduction, which had a notable influence on BTC, ETH, and other crypto assets due to their correlation with USD liquidity.

Private indicators promote optimism across different sectors, highlighting the Federal Reserve’s strategy amidst the current lack of official data. This development underscores confidence in continuing liquidity cycles in the crypto markets, affecting BTC, ETH, and DeFi assets. Historical patterns suggest similar federal rate cuts lead to rallies in these markets.

Data trends show a rise in DeFi’s total value locked (TVL) and inflows into centralized exchanges during these periods. Placing trust in private data reinforces the Federal Reserve’s current strategy, focusing on employment over inflation, affecting historical increases in risk assets. Chief U.S. Economist, Michael Feroli, stated:

“We think a major shift in labor market momentum would be needed to prevent another cut in October.”

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