Advantage Data: Junk sectors open 2018 on an up note, post second straight gain after one loss

By Paul Deckelman

New York, Jan. 9 – The junk bond market opened up the new year last week, ended Jan. 5, pretty much the same way that it ended the old one, pushing upward for a second consecutive week, according to the latest sector-tabulated bond-performance statistics supplied to Prospect News by Advantage Data Inc.

The gains last week and in the final trading week of 2017 (ended Dec. 29) represented a solid comeback from the rare loss posed in the week ended Dec. 22, which had snapped a winning streak of five straight weeks on the upside before that, dating back to the week ended Nov. 17.

Last week marked the eighth week out of the last 10 weeks, dating back to the week ended Nov. 3, that more sectors had finished on the upside than on the downside.

Besides the loss in the Dec. 22 week, the sectors had also finished in negative territory during the week ended Nov. 10.

For the full 2017 year, a majority of the sectors finished on the plus side in 43 weeks, while losses dominated in just nine weeks.

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

That was the same 31-2 positive breakdown seen during the Dec. 29 week – although with different sectors showing losses – and it stood in stark contrast to the Dec. 22 week, when 18 of the sectors had posted losses, while 15 had shown gains on the week.

Among specific large-sized sectors during the week ended Jan. 5, miscellaneous retailing had the strongest performance, while the paper manufacturing sector did the worst.

Year-to-date performance for the various sectors closely tracked their weekly performance.

Retailers on the rise

Miscellaneous retailing was the strongest-finishing large-sized sector during the week ended Jan. 5, returning 2.05% on the week.

It was the retailers’ second week out of the last three among the Top Five best-performing large-sized sectors, having also been there during the week ended Dec. 22, when it had returned 0.31%.

Other sectors showing strength during the Jan. 5 week included coal mining (up 1.65%), chemical manufacturing (up 1.63%), food stores (up 1.46%) and oil and natural gas extraction (up 1.29%).

It was the second consecutive week among the elite finishers for both food stores and oil and gas extraction, which had been there during the Dec. 29 week with gains of 0.90% and 0.43%, respectively.

Food stores, in fact, had been the single best major-sector performer that week.

The grocers have now been among the Top Five in five weeks out of the last seven and have led all of the sectors in three weeks out of the six, having also claimed the crown with returns of 0.74% during the week ended Dec. 8 and 1.13% during the week ended Dec. 1.

Oil and gas extraction, meantime, has now been part of the Top Five in four weeks out of the last five, having also been there in the week ended Dec. 15 with a 0.34% gain – the best of any key sector that week – and in the Dec. 8 week, when it was up by 0.57%.

Among the other leaders on the week, coal mining has now been among the Top Five in two weeks out of the last three, having also been there in the Dec. 22 week with a 0.65% advance.

The chemicals, sector, on the other hand, had spent the Dec. 29 week among the Bottom Five worst-performing large-sized sectors, with a 0.04% loss that week.

However, chemicals have now been among the Top Five finishers in three weeks out of the last six, including the Dec. 22 week, when its 0.65% return led all of the sectors, and the Dec. 8 week, when it gained 0.68%.

Papermakers are punished

On the downside, paper manufacturing had the worst loss last week among the major sectors, ending down 0.30%.

The grouping has now been among the Bottom Five in three weeks out of the last four, having also had that dubious distinction during the Dec. 29 and Dec. 15 weeks, with an anemic 0.10% gain and a definitive 1.07% loss, respectively.

Precision instrument manufacturing (down 0.01%) was the only other large-sized sector actually showing a loss in the last week, its second week in the last three among the Bottom Five, having also been there in the Dec. 22 week with a 0.22% loss.

With just two sectors actually finishing in the red last week, the Bottom Five was rounded out by sectors merely showing considerably smaller gains than most other sectors.

These included non-depository credit institutions (up 0.15%), depository financial institutions (up 0.21%) and two sectors each returning 0.24% on the week, building construction and industrial machinery and computer equipment manufacturing.

Precision instrument manufacturing and non-depository credit have both now been among the underachievers in two weeks out of the last three, having each been there in the Dec. 22 week with losses of 0.22% and 0.17%, respectively.

The depository financials, on the other hand, were among the Top Five finishers the week before, posting a 0.35% gain during that Dec. 29 week.

Year-to-date results

Year-to-date performance for the various sectors after one week’s time generally tracked their weekly performance fairly closely, but not exactly.

On the plus side, miscellaneous retailing (up 1.99%) was the leader, followed by second-best coal mining (up 1.48%), third-best chemical manufacturing (up 1.57%), fourth-best telecommunications (up 1.56%) and fifth-best food stores (up 1.41%).

Retailing, coal mining and food stores had each been among the worst year-to-date performers closing out 2017.

Chemical manufacturing, however, was third-best YTD for a second consecutive week.

On the downside, paper manufacturing (down 0.09%) was the worst year-to-date performer, with precision instrument manufacturing (down 0.05%) second-worst, non-depository credit (up 0.11%) third-worst on the year so far, depository financials (up 0.16%) fourth-worst and insurance carriers (up 0.21%) fifth-worst so far.

© 2015 Prospect News.
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