US financials rally as unemployment figures boost market sentiment

US financials rallied on Friday, following the release of new data which showed the US unemployment rate hitting its lowest rate in three years. This new data raised hopes for economic growth prospects in the world’s largest economy this year, with financials being among the key beneficiaries of the boosted sentiment.

Bank of America’s five-year CDS spread tightened by 14 basis points to 248bp, with Citi tightening by a similar amount to 201bp according to data from Markit. Morgan Stanley moved in by 20bp to 258bp, while Goldman Sachs tightened by 17bp to 218bp. JP Morgan moved in by 9bp to 113bp.

Recent economic data has also showed US manufacturing output increasing, with investor sentiment being relatively bullish last week towards US financials.

Several large US financial institutions face a deadline today for agreement on a settlement over alleged mortgage foreclosure abuses, which is likely to result in significant fines.