• It's Coming...

    MARKET EDGES

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Takeaway: A relatively uneventful week in the labor market as claims go down slightly. The NSA trend, however, appears more negative this week.

Initial claims continue to follow their predictable path of improvement through February, although this week's improvement was slightly more muted than expectations. To reiterate, there is another 3 weeks of improvement ahead, which will likely be followed by a ~1 month honeymoon period before the SA data starts to turn. Prior to revision, initial jobless claims fell 2k to 366k from 368k WoW, as the prior week's number was revised up by 3k to 371k. The headline (unrevised) number shows claims were lower by 5k WoW. Meanwhile, the 4-week rolling average of seasonally-adjusted claims fell -1.5k WoW to 350.5k. The 4-week rolling average of NSA claims, which we consider a more accurate representation of the underlying labor market trend, was -0.9% lower YoY, which is a sequential deterioration versus the previous week's YoY change of -4.7%. This raises an interesting question about whether the payroll tax hike and high-earner tax rate changes are, in fact, having a negative impact on employment beneath the seasonal adjustment factors.

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Yield Spreads

The 2-10 spread fell -1.5 basis points WoW to 171 bps. 1Q13TD, the 2-10 spread is averaging 164 bps, which is higher by 22 bps relative to 4Q12.

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Joshua Steiner, CFA