• It's Here!

    Etf Pro

    Get the big financial market moves right, bullish or bearish with Hedgeye’s ETF Pro.

  • It's Here

    MARKET EDGES

    Identify global risks and opportunities with essential macro intel using Hedgeye’s Market Edges.

Takeaway: The number of people filing initial jobless claims continues to drop at an accelerating rate year-over-year.

The Most Important Economic Data Series We Follow Remains Green

For many weeks now we've been highlighting the accelerating strength in the labor market. This week is no exception. NSA initial jobless claims were better YoY by 11.2% this week, compared with 10.1% and 10.9% in the prior two weeks. Meanwhile, the 4-wk rolling average NSA claims was lower YoY by 10.5%, and improvement from the prior week's 10.2%, and the second strongest rate of YoY improvement we've seen YTD. 

The bottom line takeaway here is that the labor market is, in fact, stronger than most think and financials that are positively levered to ongoing improvement in labor conditions should continue to outperform. Moreover, given the growing shadow of uncertainty painting the recent tape, we'd look to this data series more than any other as a green light for buying weakness. 

The Data

Prior to revision, initial jobless claims fell 5k to 331k from 336k WoW, as the prior week's number was revised up by 1k to 337k.

The headline (unrevised) number shows claims were lower by 6k WoW. Meanwhile, the 4-week rolling average of seasonally-adjusted claims rose 0.75k WoW to 331.5k.

The 4-week rolling average of NSA claims, which we consider a more accurate representation of the underlying labor market trend, was -10.5% lower YoY, which is a sequential improvement versus the previous week's YoY change of -10.2%

INITIAL CLAIMS: THE TREND IS YOUR FRIEND - 1

INITIAL CLAIMS: THE TREND IS YOUR FRIEND - 2

INITIAL CLAIMS: THE TREND IS YOUR FRIEND - 3

INITIAL CLAIMS: THE TREND IS YOUR FRIEND - 4

INITIAL CLAIMS: THE TREND IS YOUR FRIEND - 5

INITIAL CLAIMS: THE TREND IS YOUR FRIEND - 6

INITIAL CLAIMS: THE TREND IS YOUR FRIEND - 7

INITIAL CLAIMS: THE TREND IS YOUR FRIEND - 8

INITIAL CLAIMS: THE TREND IS YOUR FRIEND - 9

INITIAL CLAIMS: THE TREND IS YOUR FRIEND - 10

INITIAL CLAIMS: THE TREND IS YOUR FRIEND - 11

INITIAL CLAIMS: THE TREND IS YOUR FRIEND - 12

INITIAL CLAIMS: THE TREND IS YOUR FRIEND - 13

INITIAL CLAIMS: THE TREND IS YOUR FRIEND - 19

INITIAL CLAIMS: THE TREND IS YOUR FRIEND - 14

Yield Spreads

The 2-10 spread fell -14 basis points WoW to 238 bps. 3Q13TD, the 2-10 spread is averaging 231 bps, which is higher by 60 bps relative to 2Q13.

INITIAL CLAIMS: THE TREND IS YOUR FRIEND - 15

INITIAL CLAIMS: THE TREND IS YOUR FRIEND - 16

Joshua Steiner, CFA

Jonathan Casteleyn, CFA, CMT