Advantage Data: Junk sectors up third straight week, nine out of last 10; coal on a roll

By Paul Deckelman

New York, Oct. 11 – The junk bond market continued to push higher last week, its third consecutive week on the upside, according to the latest sector-tabulated bond-performance statistics supplied to Prospect News on Tuesday by Advantage Data Inc.

The three weeks have represented a powerful comeback from the most recent downturn, in the week ended Sept. 16, which had snapped a winning streak of six consecutive weeks before that of continual improvement.

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

On a somewhat longer-term basis, in the 40 weeks since the start of the year, gainers have dominated in 31 of those weeks, versus nine 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.

Besides that 11-week winning streak and subsequent more recent improvements, the sectors had also done better during the week ended Jan. 29 – after having started 2016 with three straight weeks on the downside and then ultimately racking up losses in five out of the first six weeks of the new 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 28 sectors ending in the black last week, versus five sectors in the red.

That was about the same breakdown seen the previous week, ended Sept. 30, when 29 sectors showed gains and four had losses.

The week before that, ended Sept. 23, showed a clean sweep to the upside, with all 33 of those bigger sectors ending in positive territory and none at all on the negative side.

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 sector showed a gain on the week.

Among specific large-sized sectors last week, coal mining showed the best gain for a second week in a row, while food stores had the biggest loss.

Coal’s strong showing on the week propelled the sector to the top on a year-to-date basis, displacing metals mining, while food stores were at the bottom of the year-to-date rankings for a fifth week in a row, and in 11 out of the last 13 weeks.

Coal is red-hot

Among specific large-sized sectors, the coal-mining sector (up 3.57%) had the biggest gain, its second straight week in the top spot. The week before, its 1.66% gain had been the best among the large-sized sectors.

It was coal’s third consecutive week among the Top Five best-performing major sectors, and its fifth week there out of the last six.

Also showing strength in the latest week were energy exploration and production (up 1.93%), oil and natural gas extraction (up 1.92%), oilfield services (up 1.23%) and midstream energy services (up 0.66%).

It was oil and gas extraction’s second straight week in the Top Five, having also been there the week before with a 1.42% gain.

Energy E&P meanwhile marked its third week in a row in the Top Five, having been there the previous week with a 1.57% gain and a 1.15% rise the week before that. E&P has now been in the Top Five in four weeks out of the last five and six weeks out of the last nine.

Food stores falter

On the downside, the food stores sector (down 0.39%) had the biggest loss of any of the significantly sized sectors last week.

It was among the Bottom Five weakest performers for a second straight week, having also been there the week before with 0.05% loss.

Other underachievers last week included miscellaneous retailing (down 0.03%), the insurance carriers and non-depositary credit institutions sectors (both down 0.02%) and holding companies and other investment offices (down 0.01%).

It was the second straight week in the Bottom Five for miscellaneous retailing, which had also been there the week before with a meager 0.02% gain.

The insurance carriers have now been in the Bottom Five in two weeks out of the last three.

Coal conquers YTD rankings

On a year-to-date basis, coal mining’s strong showing last week and the week before pushed the sector back to the top of the year-to-date rankings, with a cumulative gain of 78.42%.

Coal had been in the runner-up spot over the previous three weeks, and four weeks out of the prior seven, but had been the best year-to-date performer in the weeks ended Sept. 2 and Sept. 9.

It traded places with metals mining (up 62.46%), which dropped into second place last week after three straight weeks at the top, and a total of 29 weeks out of the previous 31 – all but the aforementioned two early September weeks when coal had the best cumulative return.

Energy E&P (up 38.71%) was third-best on a year-to-date basis for a second straight week and for a seventh week out of the last eight.

Oil and gas extraction (up 36.22%) was fourth best year to date for a sixth straight week and for an eighth week out of the last nine.

Primary metals processing (up 29.15%) was fifth-best on the year for a sixth straight week and for a seventh week out of the last nine.

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 4.35% gain, the sector’s fifth straight week there. The grocers have now been the worst cumulative performer in 11 weeks out of the last 13.

Automotive services (up 6.68%) was second-worst on the year for a fourth straight week, and have now been in that position in seven weeks out of the last nine and in 10 weeks out of the last 13.

Depository financial institutions (up 7.55%) fell to third-worst on the year from just fourth-worst the week before, but have now been third-worst in three weeks out of the last four.

The securities and commodities brokers, dealers and exchanges sector (up 8.11%), improved, relatively speaking, to just fourth-worst on the year from third-worst the week before, and has been in that fourth-worst slot in two weeks out of the last three.

Chemical manufacturing (up 8.58%) was fifth-worst on the year for a third straight week.

© 2015 Prospect News.
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