The uptick underscores a cooling labor market that has increasingly worried both investors and policymakers in recent weeks.
The report follows a string of weak employment indicators. Earlier, ADP revealed that private-sector employers added just 54,000 jobs in August, far below the 68,000 expected. Together, these figures add weight to the view that hiring momentum in the U.S. economy is faltering. The trade deficit also widened to $78.3 billion, suggesting a softer backdrop for growth.
Markets quickly interpreted the jobless data as another sign that the Federal Reserve’s tightening cycle has pushed the economy close to the edge. Investors are now betting almost unanimously on rate relief. According to CME Group’s FedWatch tool, there is a 98% chance of a 25-basis-point cut when the Fed meets on September 16–17.
Analysts at UBS Global Wealth Management argue the central bank may need to act more aggressively, saying risks to employment now overshadow lingering inflation worries. They forecast that the Fed could ultimately trim rates by as much as 100 basis points, beginning this month, in an effort to prevent deeper cracks in the labor market.
For Wall Street, the weak claims report and Powell’s dovish tilt at Jackson Hole point to a decisive pivot in policy. Stocks could benefit in the near term if rate cuts improve liquidity conditions, but the bigger question is whether easing will be enough to stabilize a slowing economy without tipping it into recession.
The next few weeks will be crucial: if labor market data continues to disappoint, the Fed may have little choice but to accelerate rate reductions. That dynamic could ripple across currencies, bonds, and equities, while also reigniting momentum for alternative assets such as gold and Bitcoin, which tend to thrive when rate expectations turn sharply dovish.
The shift in expectations has also caught the attention of crypto traders. Bitcoin, often seen as a hedge against both monetary easing and financial instability, could find new tailwinds if the Fed commits to aggressive cuts. Lower interest rates tend to weaken the U.S. dollar and drive investors toward alternative stores of value. If the Fed delivers on market expectations, Bitcoin could regain momentum after recent struggles, with some analysts suggesting the conditions are aligning for a renewed push toward previous highs.
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