Advantage Data: Junk posts fifth straight gain, now up in nine out of last 10 weeks

By Paul Deckelman

New York, July 25 – The junk bond market moved higher last week, its fifth consecutive week on the rebound following a dramatic plunge seen during the week ended June 17, according to the latest sector-tabulated bond-performance statistics supplied to Prospect News on Monday 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 nine of them.

On a somewhat longer-term basis, in the 29 weeks since the start of the year, gainers have dominated in 22 of those weeks, versus seven weeks in which more negatives were seen.

As noted, 11 of those better weeks came during the long winning streak which began during the week ended Feb. 19 and then had extended through the week ended April 29. Besides that lengthy 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 ultimately 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 28 of those bigger sectors finishing in the black last week and five sectors ending in the red.

That was a modest retreat from the dominating 33-0 clean sweep seen in the previous three weeks ended July 1, July 8 and July 15.

During the most recent downside week, ended June 17, fully 31 of those sectors had been in negative territory, against just two of the sectors ending on the positive side of the fence.

Among specific large-sized sectors last week, building construction was the top performer.

Coal mining, on the other hand, turned in the worst performance.

For the year to date, metals mining had the best cumulative return of any large-sized sector for a 21st consecutive week, while food stores made the worst cumulative showing for a second straight week and six weeks out of the last seven.

Building construction tops

Among specific large-sized sectors, building construction (up 0.79%) was the top performer last week, as noted, narrowly edging out paper manufacturing (up 0.78%).

Also showing strength last week were the automotive services and industrial machinery and computer equipment manufacturing sectors, both of which were up by 0.66%, and holding companies and other investment offices (up 0.55%).

None of the week’s Top Five best finishers had been among that elite group over the past few weeks.

Coal digs a hole

For the first time in four weeks, there were large-sized sectors actually finishing in the red last week.

Most were energy-related – a departure from the recent pattern, when those credits were consistently among the best performers most weeks.

Coal mining (down 1.24%) was the worst large-sized performer last week.

Other sectors showing weakness included energy exploration and production (down 0.55%), oil and natural gas extraction (down 0.52%), oilfield services (down 0.34%) and the sole non-energy grouping, transportation equipment manufacturing (down 0.09%).

Oil and gas extraction had been among the Top Five finishers in the July 15 week with a 1.66% gain, and had been among the Top Five in seven out of the previous eight weeks.

Metals mining tops on year

On a year-to-date basis, with 29 trading weeks in the books so far for 2016, metals mining (up 55.42%) remained as the best-performing large-sized sector on a cumulative basis for a 21st straight week.

Energy exploration and production (up 29.85%) moved up by one notch in the rankings, reclaiming its familiar runner-up spot after having temporarily moved down by one position to just third-best the week before; E&P has now been in second place in seven weeks out of the last eight.

Oil and natural gas extraction (up 27.89%) likewise reclaimed third place after having temporarily moved down one notch to fourth in the July 15 week; it has now been third-best on the year in four weeks out of the last five.

Primary metals processing (up 27.04%) moved up by one rung on the ladder to fourth-best on the year after having been just fifth-strongest on the year for six straight weeks before that.

Coal mining (up 26.85%), the week’s worst performer, as noted, tumbled by three positions in the standings to just fifth-best last week, after having moved up by two notches during the July 15 week, when it went from fourth-place to second place.

None of the year-to-date best sectors were also among the week’s best finishers last week.

Food stores falter

On the downside, food stores (up 3.71%) had the smallest year-to-date return of any major sectors for a second straight week and for six weeks out of the last seven.

Automotive services (up 5.18%) was second-worst for a second consecutive week after having been only third-worst for four weeks before that.

Non-depository financial institutions (up 5.42%) fell to third-worst on the year, despite not having been among the worst laggards the week before.

It was tied with chemical manufacturing (up 5.42%), which was third-worst for a second straight week.

Depository financial institutions (up 5.45%) were fourth-worst on the year for a sixth straight week.

None of the cumulative losers were also among the weekly Bottom Five.

© 2015 Prospect News.
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