Advantage Data: Junk sectors turn negative for first time in ’17, snap eight-week winning streak

By Paul Deckelman

New York, Jan. 23 – The junk bond market finally stumbled during the most recent reporting week (ended Jan. 20) after a long upside run, according to the latest sector-tabulated bond-performance statistics supplied to Prospect News on Monday by Advantage Data Inc.

It was the first losing week seen this year, following eight consecutive weeks of strength before that, when nearly all of the significantly sized sectors had repeatedly ended in positive territory.

The sectors had been heading higher ever since decisively breaking out of a rut in late November, when they had snapped a four-week losing streak.

In the latest 10 weeks, dating back to the week ended Nov. 18, there have been eight weeks of gains, versus two weeks of losses during that stretch.

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 22 of those bigger sectors finishing in the red last week, versus eight ending in the black and three others having been unchanged on the week, showing neither a gain nor a loss.

That represented a definitive reversal from the decisively positive breakdown seen the week before, ended Jan. 13, when 29 of those major sectors had posted gains and just four had shown losses. Similarly strong positive results had also been seen over most of the seven weeks before that.

Among specific large-sized sectors during the Jan. 20 week, real estate posted the biggest gain, while automotive services had the worst loss.

With three weeks now in the books for 2017, oilfield services has been the best-performing large-sized sector so far, while coal mining has been the worst performer for all three weeks – a full reversal of how that sector had ended 2016.

Real estate leads on week

Real estate turned in the strongest performance of any large-sized sector last week, as noted, rising by 0.54% on the week.

Also showing strength during the latest week were wholesale durable goods distributors (up 0.33%), building construction (up 0.23%), and two sectors each gaining 0.13% on the week, electric and natural gas utilities and lodging.

It was the second consecutive week the utilities were finishing among the Top Five strongest-performing large-sized sectors; in fact, the grouping had been the strongest among all of the key sectors during the Jan. 13 week, with a 0.57% gain.

Lodging was back among the Top Five after a week-long hiatus, having also been there during the week ended Jan. 6, when it was up by 1.41% on the week.

Auto sector in a skid

On the downside, automotive services – chiefly consisting of vehicle-rental companies – lost 1.34% last week, the worst showing out of any of the large-sized sectors, as noted.

It was the auto grouping’s second consecutive week finishing in the red, having also done so during the Jan. 13 week with a 0.09% setback.

Other sectors also showing relatively sizable losses last week were food stores (down 0.66%), holding companies and other investment offices (down 0.43%), coal mining (down 0.35%) and energy exploration and production (down 0.20%).

It was coal’s third consecutive finish among the Bottom Five worst-performing large-sized sectors; it had also been among the underachievers, and in fact had the worst showing of any sizable sector during both the Jan. 13 week (down 0.48%) and the Jan. 6 week (down 0.06%), when it had been the only significantly sized sector finishing in the red that first trading week of the new year.

Coal worst on year

With those kinds of weekly results, coal, not surprisingly, has been the worst year-to-date performer for all three weeks of 2017 so far, down a cumulative 0.84% last week.

That represents a full reversal of how that sector had ended 2016, when coal had finished out the year with the best cumulative return (up 137.40%), holding the top spot for the last six weeks of the year and in 11 weeks out of the final 13.

Other year-to-date laggards last week included non-computer electronics manufacturing (down 0.49% on the year so far), weekly cellar-dweller automotive services (down 0.30%), miscellaneous retailing (up 0.30%) and food stores (up 0.41%).

On the upside, oilfield services has emerged as the best-performing major sector year to date with a 2.20% cumulative return so far, followed by electric and gas utilities (up 2.08%), lodging (up 1.91%), chemical manufacturing (up 1.84%) and oil and gas extraction (up 1.75%).

© 2015 Prospect News.
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