Initial Claims Fall Slightly
Initial jobless claims fell 2k to 357k last week, though after a 4k upward revision to the prior week's number the reported WoW decline is 6k. On a rolling basis, after the revisions the series fell by 4k to 362k. On a non-seasonally adjusted basis, claims fell 12k to 311k.
We continue to expect claims to rise meaningfully over the coming five months as the seasonal adjustment factors turn from tailwind to headwind. This will be an overhang on Financials through the Spring and Summer months. In our last claims note, we noted that the S&P and claims had converged. These two series are highly cointegrated, meaning that they move together over long periods of time but are susceptible to short-term divergences. As such, based on our expectation for claims to rise ~40k in the coming months, we expect the sector to come under growing pressure.
The 2-10 spread widened 3 bps versus last week to 188 bps as of yesterday. The ten-year bond yield increased 3 bps to 223 bps.
Financial Subsector Performance
The table below shows the stock performance of each Financial subsector over four durations.
Joshua Steiner, CFA
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