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Democrats’ takeover of Congress could limit President Donald Trump’s influence over Federal Reserve appointments, but resilient US employment data may keep interest rate cuts out of reach, according to Bitunix analysts.
In a Thursday market update, the analysts said Democratic control of the Senate would give lawmakers greater authority to challenge Trump’s nominees to the Fed’s Board of Governors, complicating his efforts to reshape the central bank.
The Senate Banking Committee, which is expected to be led by Senator Elizabeth Warren, could also increase scrutiny of Fed Chair Kevin Warsh and the transparency of monetary policy decisions.
Markets initially welcomed the election results on Wednesday, with the S&P 500 gaining 1.6% and the Dow Jones Industrial Average advancing 3% after Trump signaled a willingness to work with Democrats.
However, by Thursday morning, risk assets began tumbling, with the S&P 500 and Nasdaq falling sharply alongside Bitcoin as selling pressure intensified across technology stocks and crypto markets.
Bitunix analysts said the political shift does not necessarily translate into easier monetary policy, particularly as recent employment figures point to continued labor market resilience.
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According to ADP’s October employment report, private employers added 86,000 jobs, exceeding economists’ expectations of 69,000. Median base pay growth remained at 3.2%, while pay increases for workers changing jobs reached 4.8%.
Separately, Bureau of Labor Statistics data showed job openings increased by 333,000 to 7.523 million in September, while layoffs declined to 1.641 million.
The figures suggest the labor market has not weakened enough to justify aggressive monetary easing, although continued job losses in professional and business services point to uneven conditions across industries.
Attention now turns to Friday’s nonfarm payrolls report, with economists expecting 65,000 new jobs and an unemployment rate of 4.2%.
Bitunix analysts said employment holding near expectations would give the Fed more room to assess inflation before adjusting rates, while a sharp deterioration could strengthen expectations for monetary easing.
The analysts also pointed to the Reserve Bank of Australia’s decision to raise its benchmark interest rate to 4.85% this week as evidence that inflation concerns remain elevated across major economies.
For Bitcoin and other risk assets, the analysts said the interest rate outlook will continue to depend on employment and inflation data, even as congressional oversight of the Fed increases.
