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Initial jobless claims fell 1k last week to 403k (falling 6k net of the revision to the prior week). Rolling claims were also at 403k, down 6k from the prior week. While the rate of improvement has been disappointing, claims have been edging lower over the last five weeks (on a rolling basis). We remain struck by the fact that the supposedly "technical" factors that affected the 395k number published a few weeks ago have not yet reversed. Overall, this is more positive than we would have expected, especially given market weakness and the lack of fiscal or monetary stimulus.
Meanwhile, the spread between claims and the S&P remains nearly as wide as it's ever been in the last three years. If claims move to the level implied by the S&P, that would be roughly 450k. For reference, a 475k claims level would be consistent with 0% or lower GDP growth.
The 2-10 spread tightened by 2 bps last week as the 10-year yield dropped 5 bps.
The table below shows the performance of financial subsectors over various durations.
Joshua Steiner, CFA
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