Claims Drop 13k, Remain Flat on a Rolling Basis
Initial claims fell 13k last week, dropping to 414k. The 4-week average was unchanged, and claims remain higher than they were at the beginning of the year. We show below initial claims with the S&P and XLF. Over the last several years, the indices have climbed when claims are dropping, and held flat or pulled back when claims stagnate or rise. The tight correlation between market performance and Federal Reserve purchases is ominous heading into the end of QE2.
We track the 2-10 spread as a proxy for NIM. Thus far the spread in 2Q is tracking 11 bps tighter than in 1Q. This week's spread level of 259 bps compares to 257 bps last week.
Financials Subsector Performance
The chart below shows the price performance of subsectors over four durations.
Joshua Steiner, CFA