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Initial Claims Rise 13k (17k After Revision)

Initial claims rose 13k last week to 462k (rising 17k before the upward revision of last week’s data).  Rolling claims came in at 459k, an increase of 2.25k over the previous week and the first increase in the series in seven weeks. All told, claims remain in the same band they’ve occupied since the start of the year. It bears worth repeating that claims need to be in the 375-400k range before unemployment can start to fall. For reference, we pointed out last week the curious fact that of the claims revisions over the past 24 weeks, 23 were revised higher (more claims) the week after. We calculated that the odds of that happening randomly were one in 699,000. This week, claims from last were, surprisingly, revised higher by 4k bringing the running count to 24 upward revisions out of 25 instances. For those curious, the odds of 24 in 25 going higher are one in 1.34 million.

INITIAL CLAIMS REMAIN STUCK IN THE MUD - UP 13K THIS WEEK - rolling

INITIAL CLAIMS REMAIN STUCK IN THE MUD - UP 13K THIS WEEK - raw

Our firm continues to expect a further economic slowdown relative to the first half of the year and into 2011 that will keep a lid on new hiring activity as management teams focus on cost control. We're seeing anecdotal signs of this in the Financials recently.

 

Yield Curve

The following chart shows 2-10 spread by quarter while the chart below that shows the sequential change. The 2-10 spread (a proxy for industry NIM) has been collapsing in the past two quarters.  Yesterday’s closing value of 206 bps is up from 201 bps last week.

INITIAL CLAIMS REMAIN STUCK IN THE MUD - UP 13K THIS WEEK - spreads

INITIAL CLAIMS REMAIN STUCK IN THE MUD - UP 13K THIS WEEK - spreads qoq

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

INITIAL CLAIMS REMAIN STUCK IN THE MUD - UP 13K THIS WEEK - subsector perf

Joshua Steiner, CFA

Allison Kaptur