Mixed U.S. economic data is fueling speculation that the Federal Reserve could adopt a more dovish stance on interest rates, potentially providing support for Bitcoin and other risky assets, market analysts say.
Several key U.S. macroeconomic indicators today painted a picture of stagnant growth and persistent inflationary pressures, adding to uncertainty in financial markets. The latest ADP report showed private sector job creation slowing significantly in April. Only 62,000 new jobs were added, well below expectations of 108,000 and well below March’s 147,000.
At the same time, U.S. first-quarter GDP unexpectedly shrank by 0.3%, marking the first negative quarterly growth since 2022. Economists had forecast a modest 0.2% expansion. Meanwhile, inflation data from the Fed’s preferred indicator, the Personal Consumption Expenditures (PCE), presented a mixed picture. March PCE rose 2.3% annually, slightly ahead of expectations of 2.2%, while Core PCE, which excludes food and energy prices, came in at 2.6% annually, in line with expectations and down from February’s revised 3.0%.
The combination of slow growth and steady inflation has revived talk of stagflation and led to speculation that the Fed may be forced to ease monetary policy sooner than expected.