Advantage Data: Junk sectors rebound after prior week’s loss, now up in seven of last 10 weeks

By Paul Deckelman

New York, July 17 – The junk bond market turned positive last week, ended July 14, according to the latest sector-tabulated bond-performance statistics supplied to Prospect News on Monday by Advantage Data Inc., rebounding from the downturn seen the week before, ended July 7.

It was the second such snap-back seen in the last three weeks, with the sectors having also been on the rebound during the week ended June 30, following a loss during the week ended June 23, which had snapped a five-week winning streak.

Last week marked seventh winning week for the sectors out of the last 10 weeks, dating back to the week ended May 12, versus three negative weeks during that stretch. Besides the July 7 and June 23 weeks, there were also more losing sectors than gainers during the week ended May 12, which had snapped a six-week upside run.

For the year to date, a majority of the sectors have finished on the plus side in 22 weeks so far, while negative results have dominated in six weeks to date.

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 31 of those sectors ending in the black last week, with only two sectors finishing in the red.

That stood in stark contrast versus the breakdown seen during the July 7 week, when 27 of those sectors had suffered losses, while just five sectors had posted gains and one sector had ended unchanged on the week, showing neither a gain nor a loss.

Among specific large-sized sectors during the July 14 week, automotive services repeated as the top performer, its third consecutive week on top, while food stores had the biggest loss.

On a year-to-date basis, with 28 weeks of 2017 now in the books, lodging held sway as the best cumulative performer for a fourth straight week, while energy exploration and production did the worst.

Auto services stays on top

Automotive services, as noted, consisting largely of vehicle-rental companies, was the top finisher among the large-sized sectors for a third consecutive week, gaining 1.62% last week.

That followed a 13% upturn during a mostly negative July 7 week, following a 2.11% surge during the June 30 week.

It was the fourth week out of the last five during which automotive services had been the top-finishing sector of all, having also driven higher during the week ended June 16 with a 1.10% gain.

Other sizable sectors showing strength in the latest week included a quartet of energy and natural resources groupings – coal mining (up 1.08%), energy exploration and production (up 1.05%), oil and natural gas extraction (0.96%) and metals mining (up 0.76%).

Energy E&P and oil and gas extraction were rebounding last week after losses in the July 7 week of 0.48% and 0.67%, respectively – the latter a big enough deficit to lead all of the sizable sectors that week.

But both of those volatile sectors have now been among the Top Five best-performing large-sized sectors in two weeks out of the last three, having also made it in the June 30 week, when E&P gained 1.36% and oil and gas extraction was up by 1.29%.

Food stores, electronics lose

On the downside, such as it was, only two major sectors posted losses last week – and those were pretty small.

Food stores, as noted, had the biggest loss (down 0.05%), while non-computer electrical and electronics manufacturing eased by 0.02%.

Both had actually been among the Top Five during the July 7 week, with gains of 0.04% and 0.01%, respectively.

And the grocers had also been among the better performers the week before that, ended June 30, advancing by 0.54%.

But on a slightly longer-term basis, the supermarkets have been among the Bottom Five worst-performing sectors in three weeks out of the last five, including losses of 2.13% during the week ended June 23 and 1.53% during the week ended June 16, when it was the worst of all of the key sectors.

The electronics manufacturers were also among the Top Five during the July 7 week, edging up by 0.01%.

With only those two sectors actually finishing in the red last week, the rest of the latest week’s list of underachievers consisted merely of those posting considerably smaller gains than the other sectors.

These included building construction (up 0.11%), printing and publishing (up 0.18%) and four sectors showing a gain of 0.22% on the week – midstream energy, telecommunications, wholesale durable goods distributors and the securities and commodities brokers, dealers and exchanges sector.

Construction was part of the previous week’s Top Five with a 0.11% rise, identical to last week’s gain.

Telecom, in contrast, has now been among the Bottom Five in two straight weeks, having also been there in the July 7 week with a 0.29% loss.

The durable goods distributors have now been among the Bottom Five in two weeks out of the last three, making it during the July 30 week with a 0.21% loss.

Lodging tops for the year

On a year-to-date basis, the lodging sector (up 11.05%) held onto the top spot for a fourth consecutive week last week, followed by health care (up 9.33%) and chemical manufacturing (up 7.64%), both of which were also steady in the runner-up and third-best slots for a fourth straight week.

Depository financial institutions (up 6.87%) rose one notch in the standings to fourth-best from Number-Five the previous week, its second week in the last three in that fourth-strongest position.

Amusement and recreational services (up 6.83%) improved to fifth-best on the year.

Energy sectors lag for year

On the downside, energy exploration and production and oil and gas extraction – despite their strong performances on the week, as noted – remained at the bottom of the year-to-date rankings.

The two sectors have been trading places back and forth over the last few weeks, with E&P now the worst cumulative performer with just a 0.12% return on the year and oil and gas extraction second worst with a 0.22% return; both sectors have now been in those positions in two weeks out of the last three.

Away from the energy sphere, miscellaneous retailing (up 0.53%) was third-worst on the year for a fourth week in a row.

Non-computer electronics manufacturing (up 0.95%) was fourth-worst for a second straight week.

Food stores (up 2.12%), the week’s loser, as noted, stayed at fifth-worst on the year for a second straight week, and for a fourth week out of the last five.

© 2015 Prospect News.
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