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Takeaway: A second wave of energy job losses has begun. Energy company hedges are rolling off as we move into year-end.

Moving into the end of the year when energy companies will likely experience losses as they roll over their hedges, the energy sector has seen an uptick in job losses recently. The spread between indexed claims in energy states and the U.S. as a whole in our chart below has widened in 9 consecutive weeks so far. That includes the most recent week ending October 24 where the spread widened to 25 from 22. Additionally, the Challenger job cuts announcement this morning reported oil-related cuts made up more than one quarter of the 50.5 thousand total layoffs announced in October. That marks a six-month high in oil-related layoffs. 

INITIAL JOBLESS CLAIMS | NEGATIVE ENERGY - Claims18

The Data

Initial jobless claims rose 16k to 276k from 260k WoW. The prior week's number was not revised. Meanwhile, the 4-week rolling average of seasonally-adjusted claims rose 3.5k WoW to 262.75k.

The 4-week rolling average of NSA claims, another way of evaluating the data, was -7.0% lower YoY, which is a sequential deterioration versus the previous week's YoY change of -9.1%

INITIAL JOBLESS CLAIMS | NEGATIVE ENERGY - Claims2

INITIAL JOBLESS CLAIMS | NEGATIVE ENERGY - Claims3

INITIAL JOBLESS CLAIMS | NEGATIVE ENERGY - Claims4

INITIAL JOBLESS CLAIMS | NEGATIVE ENERGY - Claims5

INITIAL JOBLESS CLAIMS | NEGATIVE ENERGY - Claims6

INITIAL JOBLESS CLAIMS | NEGATIVE ENERGY - Claims7

INITIAL JOBLESS CLAIMS | NEGATIVE ENERGY - Claims8

INITIAL JOBLESS CLAIMS | NEGATIVE ENERGY - Claims9

INITIAL JOBLESS CLAIMS | NEGATIVE ENERGY - Claims10

INITIAL JOBLESS CLAIMS | NEGATIVE ENERGY - Claims11

INITIAL JOBLESS CLAIMS | NEGATIVE ENERGY - Claims19

Yield Spreads

The 2-10 spread rose 1 basis points WoW to 142 bps. 4Q15TD, the 2-10 spread is averaging 143 bps, which is lower by -10 bps relative to 3Q15.

INITIAL JOBLESS CLAIMS | NEGATIVE ENERGY - Claims15

INITIAL JOBLESS CLAIMS | NEGATIVE ENERGY - Claims16

Joshua Steiner, CFA

Jonathan Casteleyn, CFA, CMT