Odds of an October Fed Rate Cut Surge: Weak ADP Data Sends Bitcoin Above $116K

The U.S. labor market cooled far more than markets expected—instantly rewriting bets for the Fed’s October decision. The ADP private payrolls report showed a 32,000 job decline in September, versus a consensus for ~50,000 gains after a revised +54,000 in August. The probability that the Fed keeps rates unchanged in October fell to ~6% (Polymarket), reinforcing expectations for further monetary easing. At the same time, Bitcoin broke above $116,000, extending its weekly and monthly advance.

Weak Wages and Employment Are Changing the Market Narrative September delivered the largest drop in private payrolls since March 2023. Investors quickly shifted toward the view that the Fed will need to support a slowing economy with lower rates. Recall that in September the central bank cut the policy range to 4.00%–4.25%; the curve now implies another move in October, and some economists (e.g., Citi) also flag a December cut of 25 bps.

The Shutdown Elevates Private Data The government shutdown after Congress failed to pass a budget has stalled the release of many official reports. In this data fog, ADP (and other private sources) suddenly carry outsized weight in shaping expectations ahead of the Fed meeting. Without the usual Labor Department prints, investors are relying on what’s available—and September’s signal was distinctly soft.

Who Was Firing, Who Was Still Hiring The steepest losses appeared in leisure & hospitality and professional services. Small and mid-sized businesses drove the decline, while net additions were concentrated in large firms and parts of healthcare. This sector map supports the idea that labor demand is weakening most where activity is highly sensitive to credit conditions.

Bitcoin and Crypto: A Swift Response to a “Softer” Fed Risk assets benefited from the shift in expectations. Bitcoin jumped above $116,000 and posted a sharp intraday move (TradingView). Derivatives activity picked up: per Coinglass, daily BTC futures volume approached $100B, up ~18% d/d. In an environment of potentially looser policy and a softer dollar, capital often rotates toward alternative assets—and crypto tends to respond quickly.

What Could Come Next: Three Variables That Decide First, incoming data (PCE/CPI, jobless claims)—if they confirm cooling, October cut odds stay elevated.

Second, Fed communication—a hawkish tone alone could curb euphoria even without immediate action.

Third, politics—a prolonged shutdown sustains data uncertainty and lifts volatility across asset classes.

Conclusion September’s ADP downside surprise flipped the market narrative: investors now price in a rate cut in October, while Bitcoin caught a fresh tailwind. The key in the weeks ahead is whether softer data persist—and whether the Fed converts that signal into action. Until then, expect markets to react sharply to each new data point and any remarks from Fed officials.

#Fed , #bitcoin , #interestrates , #CryptoMarkets , #usd

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