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The 434k print this morning continues the positive trend we've been seeing since March. This compares with 432k last week.

The rolling average claims improved this week to 450k from 460k last week - an improvement of 10k, well ahead of the slope of 5.4k/week since March (9 months of data). We are keeping a close eye on this metric as rolling claims are the leading indicator for ongoing recovery in the economy and, by extension, the loan books for consumer lenders.Claims are seasonally adjusted, but the seasonal adjustment factor doesn't fully normalize. As such, we've seen in the last few years claims trend lower around the holidays and for the first few weeks of January. We would expect this to continue so this morning's data is no surprise. We will be watching closely the trajectory in the back half of January and early February, as this has historically been when claims tend to rise..

SONG REMAINS THE SAME - CLAIMS FURTHER BOOST CREDIT OUTLOOK - 1

For those wondering how to interpret a possible inflection in rolling claims should we see one in late January/February, we would suggest using a positive slope of 7.2k/week as an outer risk band. This is the fastest weekly rate at which rolling claims increased over a two week period since the trend of improvement began in March. Alternatively, in the absolute, one can use 475-480k as a near-term rolling upper limit based on the downward channel that's been in place since March.

Joshua Steiner, CFA