Advantage Data: Junk sectors up for second straight week, up in seven of last eight weeks

By Paul Deckelman

New York, Aug. 15 – The junk bond market made it two in a row last week, posting its second consecutive weekly gain after having moved lower the week before, 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 July 29 had been the junk market’s first downturn after five straight consecutive weeks of gains stretching back to mid-June. Its most recent loss before that, during the week ended June 17, had, in turn, broken a winning streak of five consecutive weekly gains going back to mid-May.

Gains have now been seen in seven weeks out of the last eight and in eight weeks out of the last 10.

On a somewhat longer-term basis, in the 32 weeks since the start of the year, gainers have dominated in 24 of those weeks, versus eight weeks in which more negatives were seen.

Eleven of those better weeks came during a long winning streak which began during the week ended Feb. 19 and which then had extended through the week ended April 29, before being ended by a loss the following week, ended May 6. 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 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 30 of those bigger sectors finishing in the black last week, with just three sectors ending in the red.

That was a clear improvement over the previous week, ended Aug. 5, when 23 of the bigger sectors had shown gains and seven had shown losses, while three sectors were unchanged on the week, showing neither a gain nor a loss.

That, in turn, had been a definitive rebound from the July 29 week – when 18 of the significant sectors had finished in negative territory, against 14 ending with positive results plus one sector unchanged.

Among specific large-sized sectors last week, chemical manufacturing was the top performer.

Amusement and recreation services, 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 24th consecutive week, while food stores turned in the worst cumulative showing for a fifth straight week and for a ninth week out of the last 10.

Chemical makers climb

Among specific large-sized sectors, chemical manufacturing (up 2.57%) had the biggest gain of any significantly sized sector last week.

It was a clear improvement over the week before, when the chemical makers had been among the worst performers with a 0.18% loss that week.

Also showing strength in the most recent week were energy exploration and production (up 2.29%), oil and natural gas extraction (up 1.79%), food stores (up 1.39%) and oilfield services (up 1.25%).

None of those other sectors had been among the Top Five best-performing large-sized sectors in the past few weeks.

Holding companies hardest-hit

On the downside, the amusement and recreation services sector (down 0.35%) had the worst showing of any large-sized sector last week.

The other sectors showing losses were coal mining (down 0.27%) and health care services (down 0.09%).

The week’s Bottom Five list of the worst-performing sectors on the week was rounded out by two sectors showing much smaller gains than any of the others finishing on the upside – lodging (up 0.18%) and building construction (up 0.20%).

It was the second straight week that health care services was among the laggards, having also been there the previous week with a 1.16% loss.

In contrast, coal mining and lodging had both spent the previous two weeks among the Top Five with gains during the Aug. 5 week of 1.11% and 1.79%, respectively. In fact, lodging’s gain was robust enough to put it at the very top of the prior week’s Top Five list.

Metals mining tops on year

On a year-to-date basis, with 32 trading weeks in the books so far for 2016, metals mining (up 58.18%) remained as the best-performing large-sized sector on a cumulative basis for a 24th straight week.

Energy exploration and production (up 31.04%) moved up two notches in the rankings, taking over the runner-up slot after having been only fourth-best in each of the two previous weeks.

However, energy E&P had also been the second-best cumulative performer for seven out of the eight weeks before that, and has now been Number 2 in eight weeks out of the last 11.

Primary metals processing (up 29.44%) was third-strongest on the year for a third week in a row.

Oil and gas extraction (up 27.88%) moved up one rung on the ladder, to fourth-best on the year after having been just fifth-best in each of the previous two weeks.

Coal mining (up 27.56%) dropped by three slots to just fifth-best on the year, after having been second-best for the previous two weeks.

However, it’s familiar territory for coal, which has now been fifth-best in three weeks out of the last five.

Energy E&P and oil and gas extraction, as noted, were also among the week’s best performers.

Food stores faltering

On the downside, food stores (up 4.20%) had the smallest year-to-date return of any major sector for a fifth straight week and for nine weeks out of the last 10, even though it was one of the best performers last week, as noted.

Automotive services (up 5.92%) fell to second-worst on the year after two weeks as just third-worst, but has now been second worst in three weeks out of the last five.

It traded places with chemical manufacturing (up 7.69%), which moved up to just third-worst after two weeks as second-worst, helped by its strong weekly performance, as noted. The chemical makers have now been third-worst in three of the last five weeks.

The depository financial institutions sector (up 6.29%) was fourth-worst on the year for an eighth straight week.

Securities and commodities brokers, dealers and exchanges (up 6.94%) fell to fifth-worst on the year, despite having not been among the cumulative underachievers lately.

None of the year-to-date worst performers were also among the week’s weakest finishers.

© 2015 Prospect News.
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