Advantage Data: Junk posts first loss after five straight gains, still up in eight of last 10 weeks

By Paul Deckelman

New York, Aug. 1 – The junk bond market moved lower last week, its first downturn after five consecutive weeks of gains following a dramatic drop in mid-June, according to the latest sector-tabulated bond-performance statistics supplied to Prospect News on Monday by Advantage Data Inc.

That loss in the week ended June 17 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, versus two losses.

On a somewhat longer-term basis, in the 30 weeks since the start of the year, gainers have dominated in 22 of those weeks, versus eight 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 18 of those bigger sectors finishing in the red last week, with 14 sectors ending in the black and one sector unchanged on the week, showing neither a gain nor a loss.

That was in contrast with the previous week, ended July 22, when 28 of the bigger sector had shown gains and five had shown losses.

Among specific large-sized sectors last week, coal mining was the top performer, after having been the worst finisher the week before.

Energy exploration and production on the other hand, had the biggest loss of any major sector.

For the year to date, metals mining had the best cumulative return of any large-sized sector for a 22nd consecutive week, while food stores turned in the worst cumulative showing for a third straight week and for seven weeks out of the last eight.

Coal climbs to the top

Among specific large-sized sectors, coal mining had the biggest gain of any significantly sized sector on the week, with a 1.50% gain.

Coal thus accomplished the relatively unusual feat of going from worst to first, having had the biggest loss during the week ended July 22, when it was down by 1.24%.

Also showing strength in the most recent week were lodging (up 1.25%), real estate (up 0.64%), non-computer electronics manufacturing (up 0.62%) and primary metals processing (up 0.41%).

The metals manufacturers have now been among the Top Five best-performing large-sized sectors in three out of the last four weeks.

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

Energy E&P weakest big sector

For a second consecutive week, energy-related sectors dominated the Bottom Five list of the week’s worst-performing large-sized sectors – a departure from the recent pattern, when those credits were consistently among the best performers most weeks.

Energy exploration and production (down 3.43%) was the worst large-sized performer last week, its second straight week among the worst laggards.

E&P had also been among the underachievers the week before, ended July 22, with a 0.55% loss.

Other sectors showing weakness included oil and natural gas extraction (down 3.19%), oilfield services (down 0.1.64%), food stores (down 1.25%) and health care (down 1.16%)

It was the second straight week among the Bottom Five for oil and gas extraction and oilfield services, which had been there the previous week as well with losses of 0.52% and 0.34%, respectively.

Food stores and health care had not been among the worst performers lately.

Metals mining tops on year

On a year-to-date basis, with 30 trading weeks in the books so far for 2016, metals mining (up 51.98%) remained as the best-performing large-sized sector on a cumulative basis for a 22nd straight week.

Coal mining (up 28.58%), the week’s best performer, as noted, shot up by three positions in the standings to second best from just fifth-best last week, and has now been in the runner-up slot in two weeks out of the last three.

Primary metals processing (up 28.19%) moved up by one rung on the ladder to third-best on the year after having been just fourth-strongest on the year the week before.

Energy exploration and production (up 23.71%) tumbled by two notches in the rankings, to just fourth-best on the year after having been second-best the week before and in seven out of the previous eight weeks.

Oil and natural gas extraction (up 23.00%) likewise moved down in the rankings, falling two slots to end just fifth-best on the year, after having been third-best on the year in four weeks out of the previous five.

Besides coal, as noted, primary metals processing was also among the week’s best finishers last week.

Food stores falter

On the downside, food stores (up 4.39%) had the smallest year-to-date return of any major sectors for a third straight week and for seven weeks out of the last eight.

Chemical manufacturing (up 4.67%) lost ground, worsening to second-weakest on the year after having been just third-worst two straight weeks before that.

It traded places with automotive services (up 5.09%), which improved to only third-worst on the year after having been second-worst for two consecutive weeks before that. The auto grouping is back on familiar ground, and has now been third best in five out of the last seven weeks.

Depository financial institutions (up 5.27%) were fourth-worst on the year for a sixth straight week.

Securities and commodities brokers, dealers and exchanges (up 6.31%) fell to fifth-worst on the year, despite not having recently been among the cumulative underachievers.

As noted, the food stores sector was also among the weekly Bottom Five.

© 2015 Prospect News.
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