Jobs Jolt Crushes Cut Odds

Daily Updates:

• Yesterday’s Nonfarm payrolls report in the US has poured cold water on the odds of a July rate cut by the FOMC. Exactly one month ago, 30 day fed funds futures had priced in a 28.5% probability for a 25bps rate cut in July – those odds have now been crushed to a mere 4.7%. 
• According to the report, the US economy added 147,000 jobs in June, far above the median expectation by Bloomberg economists, while the prior two months were revised higher by a cumulative 16,000 jobs. 
• Equally as important, the unemployment rate saw an unexpected decline to 4.1% from 4.2%, something none of the economists in Bloomberg’s survey had estimated. 
• The data also goes some way in vindicating Chair Powell’s recent emphasis that the US “economy is solid” and that the “labour market isn’t crying out for a rate cut”. However, beyond the headline figure, private payrolls rose by only 74,000, marking the weakest number of jobs added in the private sector since October 2024 when the US was hit with a number of hurricanes and labour strikes. 

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• Interestingly, despite the DOGE initiative having slashed 287,000 jobs so far this year, including 7,000 in the federal government for June, the bulk of the month’s overall job gains actually came from the government sector (primarily at the state and local level where 73,000 jobs were added). 
• US treasuries tumbled as markets priced out their bets on a July cut, with the two-year Treasury yield ending the day 10bps higher at 3.88%, while the 10 year-treasury yield rose 5bps to 4.35%. 

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• After initially dropping on the release of the report, BTC rallied almost vertically higher from $108K to $110K. That rally was very short-lived as spot price quickly fell and is now trading back above $108K. A similar case can be seen in ETH over the past 24 hours – the initial surge saw spot price exceed $2,600 before those gains were pared back to $2,500. 
• At-the-money implied volatility has once more fallen below 30%. The past seven days has seen 7-day BTC options trade with a volatility premium between 28% and 35%, while longer-tenor implied volatility continues to remain above 40%. That has therefore steepened the term structure of volatility once more. 
• BTC funding rates edged higher, reaching 0.018%, marking their highest levels so far in July and slightly short of the 0.021% peak in June. 

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• President Donald Trump’s big, beautiful tax bill was finally passed by the US House of Representatives yesterday following days of negotiations. The legislation will extend the tax cuts Trump implemented in his first term which were due to expire at the end of 2025, exempt taxes on tips and overtime pay and increase the cap on the SALT deduction. It also includes more than $1T in cuts to federal spending on safety-net programs such as health-care initiatives. The bill was passed in a 218-214 vote in the House and President Trump has said he plans to sign it at a ceremony in the White House later today.
• According to the CBO and Joint Committee on Taxation, the bill will increase federal deficits by $3.4T over a decade, relative to a current law baseline. We covered how increasing fiscal deficits may have supported BTC’s price action in a previous report here.

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• The House Financial Services Committee has announced yesterday, July 3, that the week of July 14 as “Crypto Week”, which will be dedicated to advancing key digital asset legislation.
• Key bills on the agenda include the Financial Innovation and Technology for the 21st Century Act, the Blockchain Regulatory Certainty Act, and the Clarity of Payment Stablecoins Act.
• The Committee will also take up the Anti-CBDC Surveillance State Act, which seeks to prevent the issuance of a central bank digital currency without explicit congressional approval.

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• Ondo Finance and Pantera Capital have launched the $250M Ondo Catalyst fund to accelerate investment in tokenized real-world assets (RWAs).
• Ondo plans to deploy capital across equity and token stakes in emerging RWA projects, calling the trend an “arms race” as exchanges and platforms compete to lead tokenized stock and ETF offerings.
• Earlier this year, Ondo launched Ondo Global Markets, an initiative to bring traditional finance markets onto the blockchain.

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• Solana accumulation strategy DeFi Development Corp, has purchased an additional 17,760 SOL tokens (approximately $2.7M) which brings  the total Solana holdings to 640,585 SOL (approximately $98.1M).

This Week’s Calendar:

Charts of the Day:

Figure 1. BTC at-the-money implied volatility across selected tenors. Source: Deribit, Block Scholes

Figure 2. ETH at-the-money implied volatility across selected tenors. Source: Deribit, Block Scholes

Figure 3. BTC 25-delta put-call skew ratio across selected tenors. Source: Deribit, Block Scholes

Figure 4. ETH 25-delta put-call skew ratio across selected tenors. Source: Deribit, Block Scholes