Crypto News: Rising Jobless Claims Eclipse Inflation Data as Recession Fears Resurface

Key TakeawaysInitial jobless claims surged to 263,000, the highest in nearly four years, signaling mounting weakness in the U.S. labor market.Investors largely ignored hotter-than-expected August CPI inflation data, focusing instead on rising unemployment risks.The combination of high inflation and slowing growth has revived stagflation concerns, while traders still expect the Fed to cut rates next week.Markets Focus on Jobs, Not CPIU.S. consumer inflation came in slightly hotter than expected in August, with headline CPI rising 0.4% month-over-month and 2.9% year-over-year, while core CPI rose 3.1%. Normally, this would weigh heavily against the case for rate cuts.But markets quickly looked past the CPI release after initial jobless claims surged to 263,000, the highest reading since 2021 and well above forecasts of 235,000. The jump from last week’s 236,000 print signals fresh cracks in the labor market.Bond yields reflected the shift in focus: the 10-year Treasury yield slipped below 4%, its lowest level since April’s tariff panic rattled global markets.Crypto Reacts: Altcoins Lead the WayBitcoin (BTC $114,564) and ether (ETH) traded modestly higher after the CPI-claims double release, but altcoins showed stronger momentum:Solana (SOL $227.35) jumped 11% week-over-week to its highest since January.Dogecoin (DOGE $0.2507) surged 17% over the past week, fueled by ETF speculation and whale accumulation.XRP (XRP $3.00) reclaimed the $3 mark, gaining 6.6% week-over-week.The divergence suggests traders are pricing in easier monetary policy, with risk appetite rotating into higher-beta altcoins.Stagflation Risks ReturnThe mix of stubborn inflation and rising unemployment has revived fears of stagflation — an economic condition marked by high inflation alongside weak or negative growth.“Evidence of a slowdown in the U.S. is now appearing in the hard data; it’s no longer just in the sentiment surveys,” said Brian Coulton, chief economist at Fitch.Policymakers face a difficult choice:Cutting rates could stabilize growth but risk fueling inflation further.Holding rates steady risks deeper weakness in jobs and spending.For now, traders overwhelmingly expect the Fed to cut rates by 25 basis points at next week’s meeting. But economists caution that the balance between growth and inflation is becoming harder to manage, and markets may be underestimating the risk of a prolonged slowdown.“Americans will experience higher prices and (likely) more layoffs,” warned Heather Long, chief economist at Navy Federal Credit Union.