Presidency Trump’s tariff policies are creating Stafflation RICC in the US economy. It endangers both traditional markets and cryptocurrency prices as the facility of Federal Reserve is a separate policy option.
The new American tariff orders under President Trump are reaching their final stages. However, signs of stability are emerging in the US industrial sector.
Economic data shows that American stagflation warns
The Institute for Supply Management on Tuesday reported data of disappointing services. The user for July came in 50.1 below PMI 51.5 expectations. While the 50 is still above the 50 extension mark, which means that the service sector is expanding, it has dropped from 50.8 to 0.7 points in June.
In short, the American service economy is still increased, but is much slower than expected, and it is close to dangerly shrinking.
The employment index fell 0.8 points from last month to 46.4. When it goes below 50, it means that jobs are being cut, and it marks the lowest level of severe march. In contrast, the price index rose 2.4 points to 69.9-9-9.9.9.9.922.
This combination creates stability, where for regular people, work is difficult to find while everything costs more. Policy makers face an impossible option between fighting unemployment and controlling inflation.
For central banks, the rate requires an increase in rate to combat inflation, while the demand for growth stimulates the rate cut. Both problems cannot be solved simultaneously. In stability, central banks can decidely struggle at low rates.
More signs of stagflation Crypto markets will be
This background overshadowed US financial markets on Tuesday. Dow Jones fell 61.90 points (0.14%) to 44,1111.74. S&P 500 30.75 points (0.49%) dropped to 6,299.19. NASDAQ closed the fall of 137.03 points (0.65%) at 20,916.55. Bitcoin also fell about 1%.
After the July job reports, expectations for the Federal Reserve Policy changed. Markets now expect a cut in two rates this year. The cast for the fedwatch tool of the CME Group, markets expect a 25-base-point cut in September and October.
The possibility difference between a rate hold and cut in December is just 2%. However, if stagflation signals become stronger, this difference will be wide.
This issue can greatly affect Crypto prices. Since the Congress has passed the Genius Act, most Altcoins are keeping an eye on the movement of bitcoin.
The post -US stagflation fears were triggered as bitcoin and stock market face fed policy crisis.