FINANCIAL SECTOR TAILWINDS: CLAIMS AND SPREADS CONTINUE THEIR IMPROVEMENT

Initial Claims Approach YTD Lows

Initial jobless claims seem to be getting better. The headline initial claims number rose 4k last week to 439k, but rolling claims fell 4k to 443k. As the following two charts show, both reported and rolling claims are knocking on the door of their YTD lows, but have yet to break through. Claims still need to be in the 375-400k range for unemployment to meaningfully improve - still well below where we are now.

 

 FINANCIAL SECTOR TAILWINDS: CLAIMS AND SPREADS CONTINUE THEIR IMPROVEMENT - claims rolling

 

FINANCIAL SECTOR TAILWINDS: CLAIMS AND SPREADS CONTINUE THEIR IMPROVEMENT - claims

 

Yield Curve Widening

The following chart shows 2-10 spread by quarter while the chart below that shows the sequential change. After falling sharply for two quarters, the 2-10 spread has stabilized thus far in 4Q.  Yesterday’s closing value of 238 bps is up from 224 bps last week.

 

FINANCIAL SECTOR TAILWINDS: CLAIMS AND SPREADS CONTINUE THEIR IMPROVEMENT - spreads

 

FINANCIAL SECTOR TAILWINDS: CLAIMS AND SPREADS CONTINUE THEIR IMPROVEMENT - spreads QoQ

 

The table below shows the stock performance of each Financial subsector over four durations. 

 

FINANCIAL SECTOR TAILWINDS: CLAIMS AND SPREADS CONTINUE THEIR IMPROVEMENT - perf

 

 

 

Joshua Steiner, CFA

 

Allison Kaptur