TWO POSITIVES FOR FINANCIALS - INITIAL JOBLESS CLAIMS DOWN A HAIR; YIELD CURVE WIDENS WEEK OVER WEEK

Initial Claims

Initial claims fell 3k last week to 450k (falling 1k net of the revision). Rolling claims came in at 465k, a decline of 13.5k over the previous week. Reported claims are now at the low end of the YTD range of 450-470k that the series has occupied for all of 2010. While the series is improving in the last few weeks, the reality is that claims still need to be 50-75k lower than they are now before unemployment will start to improve.

TWO POSITIVES FOR FINANCIALS - INITIAL JOBLESS CLAIMS DOWN A HAIR; YIELD CURVE WIDENS WEEK OVER WEEK - rolling

TWO POSITIVES FOR FINANCIALS - INITIAL JOBLESS CLAIMS DOWN A HAIR; YIELD CURVE WIDENS WEEK OVER WEEK - raw

 

Yield Curve

The following chart shows the yield curve (2-10 spread) by quarter with the chart below that showing the sequential change. The 2-10 spread (a good proxy for industry NIM) has been compressing for the past two quarters. Yesterday’s closing value of 224 bps is up from 214 bps last week.

TWO POSITIVES FOR FINANCIALS - INITIAL JOBLESS CLAIMS DOWN A HAIR; YIELD CURVE WIDENS WEEK OVER WEEK - spread

TWO POSITIVES FOR FINANCIALS - INITIAL JOBLESS CLAIMS DOWN A HAIR; YIELD CURVE WIDENS WEEK OVER WEEK - spread change

The table below shows the stock performance of each Financial subsector over four durations. 

TWO POSITIVES FOR FINANCIALS - INITIAL JOBLESS CLAIMS DOWN A HAIR; YIELD CURVE WIDENS WEEK OVER WEEK - price perf

September will be the final month for meaningful census drag on employment in the economy. 

TWO POSITIVES FOR FINANCIALS - INITIAL JOBLESS CLAIMS DOWN A HAIR; YIELD CURVE WIDENS WEEK OVER WEEK - census chart

Joshua Steiner, CFA

Allison Kaptur