Advantage Data: Junk sectors rebound strongly from prior week’s plunge

By Paul Deckelman

New York, Sept. 26 – The junk bond market roared back into positive territory last week, rebounding strongly after having plunged badly the week before, according to the latest sector-tabulated bond-performance statistics supplied to Prospect News on Monday by Advantage Data Inc.

That downturn, in the week ended Sept. 16, had snapped a winning streak of six consecutive weeks before that of continual improvement. That had been the junk sectors’ first loss since back in the week ended July 29, which in turn had followed five straight weeks on the upside.

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

On a somewhat longer-term basis, in the 38 weeks since the start of the year, gainers have dominated in 29 of those weeks, versus nine weeks in which more negatives were seen.

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 a clean sweep to the upside, with all 33 of those bigger sectors finishing in the black last week, with no sectors closing in the red.

That was a complete reversal of the pattern seen in the Sept. 16 week, when 32 of those more sizable sectors had posted losses, while only one sectors showed a gain on the week.

During the week before that, ended Sept. 9, 22 of those the bigger sectors had finished in positive territory, while nine sectors were on the negative side of the ledger and two sectors were unchanged on the week, showing neither a gain nor a loss.

Among specific large-sized sectors last week, lodging showed the best gain, while insurance carriers and precision instrument manufacturers – chiefly makers of medical devices – both had the smallest gain.

Metals mining repeated as best performer on a year-to-date basis, its second week there; it had regained the familiar top spot the week before after two weeks in second-place exile behind coal mining, and has now reigned supreme in 28 weeks out of the last 30.

Food stores were at the bottom of the year-to-date rankings for a third week in a row, and in nine out of the last 11 weeks.

Lodging leads the way

Among specific large-sized sectors, the lodging sector (up 1.99%) had the biggest gain.

The innkeepers had not been among the leading performers in recent weeks.

Metals mining (up 1.83%) was second-best on the week and has now been among the Top Five best-performing large-sized sectors for three straight weeks; it was there in the Sept. 16 week with a 0.19% loss, among the smallest of any sectors, and in the Sept. 9 week with a 0.51% gain.

Also showing strength in the latest week were coal mining (up 1.38%), primary metals processing (up 1.17%) and energy exploration and production (up 1.15%).

Coal mining and metals processing had both been among the Bottom Five worst-performing large-sized sectors the week before, with losses of 0.96% and 1.14%, respectively.

Week’s smallest gains noted

With all major sectors showing gains this week, as noted, there was no downside as such; the Bottom Five list comprised those sectors with the smallest gains on the week.

These included insurance carriers and precision instrument manufacturing (both up 0.21% on the week), followed by paper manufacturing (up 0.34%), health care services (up 0.37%) and printing and publishing (up 0.40%).

None of those sectors had been among the previous week’s underperformers, while precision instruments and printing had both been among the Top Five that week, with relatively small losses of 0.19% and 0.23%, respectively.

Metals miners on top for year

On a year-to-date basis, the metals mining sector (up 66.61%) was in the top spot for a second consecutive week; it had regained that exalted position during the Sept. 16 week after having been only the runner up for the two weeks before that.

It has now had the best cumulative return in 28 out of the last 30 weeks.

Energy exploration and production (up 35.76%) moved up one notch to the runner-up position after five straight weeks as only third-best on the year.

Food stores worst on year

On the downside, food stores remained the absolute worst large sector on a cumulative basis last week with a paltry 5.81% gain, the sectors’ third straight week there. The grocers have now been the worst cumulative performer in nine weeks out of the last 11.

Automotive services (up 6.59%) were second-worst on the year last week for a second straight week, and have now been in that position in five weeks out of the last seven and in eight weeks out of the last 11.

© 2015 Prospect News.
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