Advantage Data: Junk posts second gain after recent loss, now up in seven out of last eight weeks

By Paul Deckelman

New York, July 5 – The junk bond market moved higher last week, its second consecutive week on the rebound following a dramatic loss seen during the week ended June 17, according to the latest sector-tabulated bond-performance statistics supplied to Prospect News on Tuesday by Advantage Data Inc.

That loss had been the first after five straight weeks on the upside before that, dating back to the week ended May 13.

Its most recent loss before that, during the week ended May 6, had, in turn, broken a winning streak of 11 consecutive weekly gains going back to February.

In the last 10 weeks, gains have now been seen in eight of them.

On a somewhat longer-term basis, in the 26 weeks since the start of the year, gainers have dominated in 19 of those weeks, versus seven 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 the recent improvements, 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 then racking 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 62 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 all 33 of those bigger sectors finishing in the black last week, with none ending in the red.

That was an improvement from the week before, ended June 24, during which 21 of those sectors had posted gains, with 12 others showing losses.

That modestly positive return stood in contrast to the breakdown during the June 17 week, when fully 31 of those sectors had been in negative territory, against just two of the sectors ending on the positive side of the fence.

That, in turn, had been a near-complete reversal from the week ended June 10, when 32 of those sectors had posted gains for the week and only one had suffered a loss.

Among specific large-sized sectors last week, coal mining – recently turning upward after having racked up losses earlier in the year – was the top performer for a third straight week and a fifth week out of the last six.

Real estate, on the other hand, tumbled into the cellar last week.

For the year to date, metals mining had the best cumulative return of any large-sized sector for an 18th consecutive week, while food stores were down at the bottom for a fourth week in a row.

Coal stays on top

Among specific large-sized sectors, coal mining (up 1.88%) was the top performer for a third straight week, as noted.

It had also been in the top spot during the previous week, ended June 27, with a 2.09% gain, and during the week ended June 20, when it was up by 0.45%.

It was the sector’s sixth straight week among the Top Five best-performing large-sized sectors and its fifth week in the last six leading all of the other industry groupings.

On a somewhat longer-term basis, coal – which had begun the year as a consistently underperforming sector – has now been among the Top Five in nine weeks out of the last 12.

Also showing strength last week were oilfield services (up 1.71%), metals mining (up 1.68%), oil and natural gas extraction (up 1.48%) and midstream energy services (up 1.41%).

It was the second straight week among the Top Five for both metals mining and oil and gas extraction, which also reached that elite status in the June 27 week with gains of 1.93% and 1.33%, respectively. O&G has now been among the Top Five in 10 weeks out of the last 11.

Oilfield services, in contrast, had spent the previous week among the Bottom Five worst-performing large-sized sectors, posting a 0.26% loss that week.

Midstream energy services has not recently been among the top gainers.

Real estate in retreat

With all of the 33 large-sized sectors ending last week in the black, as noted, there was no downside as such.

The week’s Bottom Five was therefore made up of the sectors posting the smallest gains.

Chief among these was real estate (up 0.16%), closely followed by holding companies and other investment offices (up 0.17%).

Other sectors showing only modest gains included the paper manufacturing and food stores sectors, both of which returned 0.30% on the week, and transportation equipment manufacturing (up 0.35%).

None of those sectors had been among the Bottom Five in recent weeks.

Metals mining tops on year

On a year-to-date basis, both the best and the worst performers from the June 24 week stayed in the same positions, relative to one another, last week.

With 26 trading weeks in the books so far for 2016, metals mining (up 48.97%) remained as the best-performing large-sized sector on a cumulative basis for an 18th straight week.

Energy exploration and production (up 31.77%) was in the runner-up spot for a fifth consecutive week.

Oil and gas extraction (up 28.41%) was third-best year-to-date for a second straight week.

Coal mining (up 26.16%) was fourth-best, also for a second week in a row.

Primary metals processing (up 21.97%) was fifth-best on the year for a fourth straight week.

As noted, metals mining, oil and gas extraction and coal mining were all also among the week’s Top Five strongest large-sized performers.

Food stores stay weak

On the downside, food stores (up 1.12%) remained at the bottom of the year-to-date rankings for a fourth week in a row.

Chemical manufacturing (up 2.07%) was second-worst for a third straight week and has now been in that spot in four weeks out of the last five.

Automotive services (up 3.46%) remained parked at third-worst on the year for a third successive week.

Depository financial institutions (up 4.32%) were fourth-worst on the year, also for a third straight week.

Non-depository credit institutions (up 4.60%) were fifth-worst on the year for a second consecutive week.

Food stores was the only one of the year-to-date underperformers to have also been in the weekly Bottom Five.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.