INITIAL CLAIMS JUMP 29K (26K AFTER REVISION); SEASONAL FACTORS AT WORK

Initial Claims Rise from YTD Lows - Seasonal Factors Likely to Dominate Through Year-End

The headline initial claims number rose 26k last week to 436k.  Rolling claims fell to 431k, 5.75k lower than the previous week.  Rolling claims hit a new YTD low, but the reported series moved off of the lows significantly. We continue to look for claims to in the 375-400k range before unemployment can meaningfully improve.  Seasonal factors appear to dominate into the year-end, as the third chart below shows. Over the next few weeks, the pattern of the last two years suggests that claims will rise further before falling sharply in the last weeks of the year. 

INITIAL CLAIMS JUMP 29K (26K AFTER REVISION); SEASONAL FACTORS AT WORK - 2

INITIAL CLAIMS JUMP 29K (26K AFTER REVISION); SEASONAL FACTORS AT WORK - 3

INITIAL CLAIMS JUMP 29K (26K AFTER REVISION); SEASONAL FACTORS AT WORK - 4

In the table below, we chart US equity correlations with Initial Claims, the Dollar Index, and US 10Y Treasury yields on a weekly basis going back 3 months, 1 year, and 3 years.

INITIAL CLAIMS JUMP 29K (26K AFTER REVISION); SEASONAL FACTORS AT WORK - 5

Joshua Steiner, CFA

Allison Kaptur