Advantage Data: Junk sectors recover after rare plunge in previous week

By Paul Deckelman

New York, May 16 – The junk bond market got back in the black last week, after having in the previous week posted its first losing week after 11 consecutive weeks on the upside before that, according to the latest sector-tabulated bond-performance statistics supplied to Prospect News on Monday by Advantage Data Inc.

In the last 10 weeks, gains have been seen in nine of them, with the retreat during the week ended May 6 the only setback during that time.

On a somewhat longer-term basis, in the 19 weeks since the start of the year, gainers have dominated in 13 of those weeks, versus six weeks in which more negatives were seen.

As noted, 11 of those better weeks came during the winning streak which began during the week ended Feb. 19 and had extended through the week ended April 29. Besides that long string of gains, and last week’s rise, the sectors had also done better during the week ended Jan. 29, after having started the new year with three straight weeks on the downside and having racked up losses in five out of the first six weeks of the year.

A subset consisting of the 33 largest sectors (out of the total of 61 broad-industry sectors into which Boston-based Advantage Data currently divides its entire high-yield universe), as measured by the number of bond issuers, the collective number of issues tracked and their total face amount outstanding, showed 28 of those bigger sectors finishing in the black last week, versus five sectors ending in the red.

That was a solid turnaround from the May 6 week, when 27 of those large-sized sectors had shown losses, just five had shown gains, and one sector was unchanged on the week, showing neither a gain nor a loss.

That week, in turn, represented a substantial deterioration from the week before, ended April 29, when 30 of those large-sized sectors had ended in positive territory, only two sectors had negative returns, and one sector had been unchanged.

Among specific large-sized sectors last week, several energy and metals sectors – which had shown remarkable strength over the previous few weeks before tumbling to the very bottom during the May 6 week and posting the worst losses that week – were back on top as a group last week, led by oilfield services.

On the downside, chemical manufacturing had the worst showing of any large-sized sector last week, and was the weakest year-to-date performer as well.

Metals mining and primary metals processing remained the best performers so far on a year-to-date basis for an 11th straight week.

Energy, metals back on top

Among specific large-sized sectors, oilfield services turned in the best performance of any large-sized sector last week, gaining 1.61% on the week.

It was a solid turnaround for the sector, which had been among the big losers the week before, ended May 6, with a 1.87% loss.

Also showing strength last week were energy exploration and production (up 1.28%), oil and natural gas extraction (up 0.95%), metals mining (up 0.90%) and coal mining (up 0.77%).

Like oilfield services, all of them had been on the previous week’s Bottom Five list of the worst-returning large-sized sectors, with losses of 2.56%, 2.29%, 2.35% and 4.52%, respectively.

Coal, in fact, had been the single-worst performer in the May 6 week, and two of the three weeks before that. But it has also now been among the Top Five best performers in three weeks out of the last five.

Energy E&P, oil and gas and metals mining, meanwhile, have now all been in the Top Five in four weeks out of the last five.

Chemical makers at the bottom

On the downside, chemical manufacturing had the worst loss of any large-sized sector last week, falling by 0.47%. That put it back among the Bottom Five for a second week in the last three.

Also posting losses last week were automotive services (down 0.20%), food stores (down 0.10%), primary metals processing (down 0.08%) and non-computer electronic equipment manufacturing (down 0.05%).

The electronics manufacturers had actually been among the previous week’s Top Five, with a 0.55% gain that week. Automotive services, while not among the major losers the previous week, have now been in the Bottom Five in four weeks out of the last five.

Primary metals processing and food stores have been among neither the best performers nor the biggest losers over the last several weeks.

Metals mining tops on year

On a year-to-date basis, with 19 trading weeks in the books so far for 2016, metals mining (up 31.56%) remained as the best-performing large-sized sector on a cumulative basis for an 11th straight week, helped by its strong weekly performance, as noted.

Primary metals processing (up 16.98%) was in the runner-up spot, also for an 11th straight week.

Oil and gas extraction (up 13.86%), moved up to third-best on the year, despite not having been among the cumulative leaders the week before.

That bumped energy exploration and production (up 13.82%) down by one notch in the ranking, to just fourth-best on the year from third place previously, although it has now held that Number-Four slot in two weeks out of the last three.

Midstream energy services (up 12.79%), in turn, also fell by one rung on the ladder, to just fifth-strongest on the year from fourth-best the week before; it has now been in fifth place in two weeks out of the last three.

Like metals mining, the energy E&P and oil and gas extraction sectors were also among the week’s best performers, as noted.

Chemicals lag on year

On the downside, chemical manufacturing (up 1.73% on the year) had the weakest showing of any large-sized sector on a year-to-date basis, despite having not been among the worst cumulative performers before.

Automotive services (up 1.76%) improved, relatively speaking, to just second-worst on the year, after having been parked down at the bottom over the previous two weeks.

Coal mining (down 1.88%) fell to third-worst, despite having not been among the worst underperformers the week before. Coal, in fact, had spent the previous three weeks not among the big-year-to-date losers, where the sector had been for most of the year before that.

Holding companies and other investment offices (up 3.07%) fell to fourth-worst, after not having been there during the May 6 week; however, the sector has now been fourth-worst in two weeks out of the last three.

Depository financial institutions (up 3.35%) was the fifth-worst sector for a third consecutive week.

Chemical manufacturing and automotive services, as noted, were among the week’s worst-performing large-sized sectors, while coal was among the week’s best performers.

© 2015 Prospect News.
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