Advantage Data: Junk sectors fall, snapping five-week upside run; coal stays hot

By Paul Deckelman

New York, Oct. 31 – The junk bond market finally stumbled and fell last week (ended Oct. 28) – its first such loss after five consecutive weeks before that on the upside, according to the latest sector-tabulated bond-performance statistics supplied to Prospect News on Monday by Advantage Data Inc.

The market had climbed in 11 of the previous 12 weeks, with its sole prior loss occurring in the week ended Sept. 16. That downturn had abruptly snapped a winning streak of six consecutive weeks before that of continual improvement.

Gains have thus now been seen in eight weeks out of the last 10, dating back to the week ended Aug. 26.

On a somewhat longer-term basis, in the 43 weeks since the start of the year, gainers have dominated in 33 of those weeks, versus 10 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 29 sectors ending in the red last week, versus just four sectors in the black.

That was a nearly complete reversal of the pattern seen the week before, ended Oct. 21, when 32 of those more sizable sectors had posted gains, while only one sector showed a loss on the week.

Among specific large-sized sectors last week, coal mining showed the best gain for a fourth week out of the last five, while oilfield services – ironically, the biggest gainer in the Oct. 21 week – had the biggest loss.

Coal’s strong showing on the week put the sector back on top on a year-to-date basis, for a third week out of the last four, while automotive services fell to the bottom of the year-to-date rankings.

Coal on a roll

Among specific large-sized sectors, the coal-mining sector (up 1.42%) had the biggest gain; it has now been the best weekly performer in four weeks out of the last five. While not the leading sector, it had still shown a hefty 1.47% gain in the Oct. 21 week.

Also showing gains in the latest week were metals mining (up 0.79%), holding companies and other investment offices (up 0.17%) and wholesale durable goods distributors (up 0.13%).

The week’s Top Five list of the best-performing large-sized sectors was rounded out by the food stores sector (down 0.04%), which had the smallest loss of any of the major sectors.

The grocers have now been in the Top Five in two weeks out of the last three, while metals mining has been there in six weeks out of the last eight.

The wholesale durable goods distributors, on the other hand, had spent the previous two weeks among the Bottom Five worst-performing large-sized sectors, including the Oct. 21 week, when it showed a relatively sedate 0.26% return.

Oilfield services plunge

On the downside, the oilfield services sector (down 1.19%) had the worst showing of any significantly sized industry grouping last week.

As mentioned, the week before that, ended Oct. 21, the volatile sector had been the top finisher, with a 1.95% gain for the week, thus accomplishing the relatively unusual feat of having gone from first to worst in the span of one week.

Other sectors showing notable weakness last week included health care services (down 1.15%), energy exploration and production (down 1.01%), oil and natural gas extraction (down 0.92%) and electric and gas utilities (down 0.72%).

Both energy E&P and oil and gas extraction had spent the previous four weeks in the Top Five, having posted gains of 1.28% and 1.54%, respectively, in the Oct. 21 week; for the E&P sector, that week had been its sixth out of the prior seven among the elite performers.

Coal conquers YTD rankings

On a year-to-date basis, coal mining’s strong showing last week pushed the sector back to the top of the year-to-date rankings, with a cumulative gain of 137.35%. It has now been on top in three weeks out of the last four.

It traded places with metals mining (up 71.60%), which dropped into second place last week after having briefly regained its familiar top position in the cumulative rankings during the Oct. 21 week.

Earlier in the year, metals mining had the strongest year-to-date showing for an eye-popping 26 consecutive weeks, until that epic winning streak was snapped by coal’s ascent in the week ended Sept. 2; the two sectors have battled for YTD supremacy in the weeks since then.

Energy E&P (up 39.95%) was third-best on a year-to-date basis for a fifth straight week and for a 10th week out of the last 11.

Oil and gas extraction (up 37.17%) was fourth-best year to date for a ninth straight week and for an 11th week out of the last 12.

Primary metals processing (up 30.31%) was fifth-best on the year, also for a ninth straight week and for a 10th week out of the last 12.

Automotive services skids

On the downside, automotive services – mostly vehicle-rental companies – fell to the bottom of the pile on a year-to-date basis with a 6.98% return. The sector had been only the second-worst cumulative performer for the previous six weeks and for nine weeks out of the prior 11.

It traded places with food stores (up 7.04%), which had been the worst over the prior seven straight weeks and 13 weeks out of 15 but which improved, relatively speaking, to just second-worst last week.

Depository financial institutions (up 7.26%) were third-worst on the year for a second consecutive week, and have now held that spot in five weeks out of the last seven.

The securities and commodities brokers, dealers and exchanges sector (up 7.66%) stayed at fourth-worst on the year for a second straight week, its fourth week in the last five in that position.

Non-depository financial institutions (up 8.24%) was fifth-worst on the year for a second straight week.

© 2015 Prospect News.
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