Predictive Strength
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Predictive Strength
Measures the number of new unemployment benefits claims.
Initial claims serve as real-time labor market diagnostics – rising claims often precede Fed dovish pivots. Crypto markets front-run expectations of liquidity injections, as seen in 2020-2021 when unemployment spikes correlated with 600% BTC gains post-QE announcements. The 2025 Skew Δ analysis showed markets pricing in 73% probability of rate cuts within 60 days of claims exceeding 240k.
Initial claims data is sourced through state unemployment offices collecting first-time benefit applications, which are aggregated and reported weekly to the Department of Labor (DOL). The DOL applies seasonal adjustments using models from the Bureau of Labor Statistics (BLS) to account for predictable fluctuations like holidays or weather. This process enables weekly releases of seasonally adjusted claims figures, serving as a leading economic indicator.
To understand a predictive factors predictive power, we create a simple long/short strategy and simulate its past performance (with daily rebalancing):
The strategy is rebalanced daily, on a continuous basis. There are 0.5% transaction costs applied on each position adjustment.
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Predictive Strength
Predictive Strength
Predictive Strength