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Takeaway: Texas and Louisiana are reporting initial claims have grown by 36% and 53% Y/Y, respectively, as of the most recent week.

Initial Claims | TX & LA Are Feeling The Pain - 1.7.16Claims20

This week's headline claims number offered a brief intermission from the data's upward trend. Seasonally adjusted claims fell 10k to 277k, and the 4-week rolling average backed off by a nominal 1k from its 5-month high of 277k to 276k.

The three charts below illustrate the challenges/pain in the energy sector. The first chart shows the Y/Y RoC in initial claims across the eight energy-heavy states, the US, the US excluding these eight states and the average change for those eight states. Of the eight states highlited, six are showing initial claims growing Y/Y. The fastest growth is in Louisiana, where claims are higher by 53% Y/Y. The second fastest growth is in Texas, where claims are higher by 36% Y/Y. Interestingly, all eight energy states are performing worse the country as a whole.

The second chart shows Y/Y RoC in initial claims since May 2014 for the US ex-Energy States and for the Energy State basket. The breakout in energy state claims began at the start of 2015 and has remained steadily decoupled since.

Initial Claims | TX & LA Are Feeling The Pain - Claims   New Energy Chart 1

Initial Claims | TX & LA Are Feeling The Pain - Claims   New Energy Chart 2

Initial Claims | TX & LA Are Feeling The Pain - 1.7.16Claims18

The Data

Initial jobless claims fell 10k to 277k from 287k WoW. The prior week's number was not revised. Meanwhile, the 4-week rolling average of seasonally-adjusted claims fell -1.25k WoW to 275.75k.

The 4-week rolling average of NSA claims, another way of evaluating the data, was -7.6% lower YoY, which is a sequential improvement versus the previous week's YoY change of -5.8%.

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Initial Claims | TX & LA Are Feeling The Pain - 1.7.16Claims19

Yield Spreads

The 2-10 spread fell -3 basis points WoW to 119 bps. 1Q16TD, the 2-10 spread is averaging 121 bps, which is lower by -15 bps relative to 4Q15.

Initial Claims | TX & LA Are Feeling The Pain - 1.7.16Claims15

Initial Claims | TX & LA Are Feeling The Pain - 1.7.16Claims16

Joshua Steiner, CFA

Jonathan Casteleyn, CFA, CMT