No Change in Initial Claims
Initial claims were flat at 423k WoW, as the 3k headline decline was offset by the 3k upward revision to last week’s print. Rolling claims rose for the first week in six to 426k, 2.5k higher than the previous week. We continue to remind investors that based on our analysis of past cycles, the unemployment rate won't improve until we see claims move into the 375-400k range. That said, it is worth highlighting an important caveat. This recession has been different in that it has pushed the labor force participation rate down by ~200 bps, which has had a correspondingly positive improvement on the unemployment rate. In other words, the unemployment rate isn't really 9.5%, it's 11.5%. So when we say that claims of 375-400k will start to bring down the unemployment rate, we are actually referring to the 11.5% actual rate as opposed to the 9.5% reported rate.
Yield Curve Comes In Slightly
We chart the 2-10 spread as a proxy for NIM. Thus far the spread in 4Q is tracking 20 bps wider than 3Q. The current level of 272 bps is down from 287 bps last week.
Financial Subsector Performance
The table below shows the stock performance of each Financial subsector over four durations.
Joshua Steiner, CFA