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Initial Claims Still Stuck Well Above 400k

Initial Claims rose 15k last week to 429k (+9k after the revision to last week's print).  The rolling 4-week average was flat for a third week in a row at 425k. Our analysis shows that initial claims need to drop below 375-400k to get an improvement in unemployment, levels that we have not achieved since February/March of this year.  As the charts below show, QE has been tightly correlated with improvement in claims, suggesting that the coming weeks may see a very choppy period.    

INITIAL CLAIMS DISAPPOINT AGAIN  - rolling

INITIAL CLAIMS DISAPPOINT AGAIN  - raw

INITIAL CLAIMS DISAPPOINT AGAIN  - NSA

INITIAL CLAIMS DISAPPOINT AGAIN  - fed and

INITIAL CLAIMS DISAPPOINT AGAIN  - s p

INITIAL CLAIMS DISAPPOINT AGAIN  - XLF

2-10 Spread Widens Slightly

We track the 2-10 spread as a proxy for NIM.  This week the spread level widened by 2 bps to 261 bps from 259 last week.  Thus far in 2Q, spreads are 12 bps tighter than the average of 1Q, posing something of a headwind to margin expansion in the quarter. 

INITIAL CLAIMS DISAPPOINT AGAIN  - spreads

INITIAL CLAIMS DISAPPOINT AGAIN  - spreads QoQ

Financials Subsector Performance

The chart below shows the price performance of subsectors over four durations.

INITIAL CLAIMS DISAPPOINT AGAIN  - perf

Joshua Steiner, CFA

Allison Kaptur