Crypto Rises as Jobless Claims Hit 4-Year High

Rising Jobless Claims Overshadow Inflation Data

The U.S. labor market delivered a shock last week as initial jobless claims climbed to 263,000, the highest level in nearly four years. This sudden spike has intensified concerns that the strong job market is losing momentum, undermining confidence in the broader economic outlook.

While inflation data showed headline CPI at 2.9% year-over-year and core CPI at 3.1%, the focus quickly shifted away from prices. Instead, investors zeroed in on the surge in unemployment claims as a more pressing signal of economic strain.

Market Reaction: Bonds And Yields Respond

Financial markets moved swiftly in response. The 10-year U.S. Treasury yield dropped by five basis points, dipping below the crucial 4% level for the first time since April, when markets were rattled by tariff-driven sell-offs.

This shift suggests that investors are bracing for slower growth rather than prolonged inflation, with government bonds regaining their safe-haven appeal.

Stagflation Concerns Resurface

The combination of stubbornly high inflation and weakening labor data has revived fears of stagflation — a toxic mix where inflation persists even as growth falters and unemployment rises.

Economists warn that such a scenario could make it more difficult for the Federal Reserve to navigate policy, as cutting rates to support jobs could risk further fueling inflation.

Impact On Crypto And Risk Assets

The crypto market initially fell after the hot CPI data but quickly rebounded once recession concerns took center stage. Altcoins such as Solana, XRP, and Dogecoin saw renewed buying interest, reflecting a shift in sentiment.

This resilience indicates that investors may increasingly view digital assets as speculative plays tied more to liquidity and risk appetite than strictly to inflation metrics.

Outlook: Growth Worries Take Priority

Overall, the economic narrative is evolving: growth risks are now outweighing inflation fears. Both policymakers and investors are expected to monitor labor-market data more closely in the coming months, as unemployment could prove to be the decisive factor in whether the U.S. economy tips into recession.

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