Advantage Data: Junk sectors turned lower last week, first 2018 loss after three straight gains

By Paul Deckelman

New York, Jan. 22 – The junk bond market turned decidedly lower last week (ended Jan. 19) – its first weekly loss of 2018 and first downturn after three 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.

It was only the second week out of the last 10 weeks, dating back to the week ended Nov. 17, that more sectors had finished with losses than had shown a gain.

Before the latest loss, the sectors had strung together two robust weeks in a row – the final trading week of 2017, ended Dec. 29, and then the first week of 2017, ended Jan. 5. During the week ended Jan. 12, the sectors had softened somewhat from those strong performances but had still finished in positive territory.

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 sectors ending in the red last week, with 10 sectors having finished in the black and one sector – amusement and recreation services – showing neither a gain nor a loss on the week.

That was a reversal from the Jan. 12 week, when 17 of the sectors had posted gains, 15 had shown losses and one sector – transportation equipment manufacturing – had been unchanged.

And that earlier week itself had marked a comedown from the two previous weeks, when 31 of those key sectors had been in positive territory just two had finished on the downside during each of those weeks, although different sectors had shown those losses in the two weeks.

As noted, last week’s loss was the first of the new calendar year, against two straight weekly gains seen in 2018 so far.

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.

Among specific large-sized sectors during the week ended Jan. 19, coal mining had the strongest performance, while chemical manufacturing did the worst.

On a year-to-date basis three weeks into the new year, food stores dominated, while paper manufacturing was at the bottom of the pile for a third straight week.

Coal heats up

Coal mining was the strongest performer on the week among the large-sized sectors, returning 0.54%.

It was the third straight week among the Top Five best-performing large-sized sectors for coal, which had also been there during the Jan. 12 week, when it rose by 0.38%, and during the Jan. 5 week, when it had posted a 1.65% gain. Coal has now also been among the Top Five in four weeks out of the last five, having also made it during the Dec. 22 week with a 0.65% advance that week.

Other sectors showing strength during the Jan. 12 week included food stores (up 0.37%), printing and publishing (up 0.24%), lodging (up 0.15%) and securities and commodities brokers, dealers and exchanges (up 0.14%).

Both the food stores sector and the brokers, dealers and exchanges sector had been among the Bottom Five worst-performing key sectors during the Jan. 12 week, with losses of 0.46% and 0.12%, respectively.

In fact, the food stores grouping had been the single worst large-sized performer that week.

However, even with that lapse, the grocers have still made it into the Top Five in three weeks out of the last four, having been among the elite finishers in the Jan. 5 week with a 1.46% return and in the Dec. 29 week, when its 0.90% weekly finish led all of the major sectors.

The brokers, dealers and exchanges sector, on the other hand, ended among the underperformers in two weeks out of the prior three, including the Dec. 29 week, when it eased by 0.09%.

Chemical makers fizzle

On the downside, chemical manufacturing had the worst finish of any large-sized sector last week, falling by 0.58%.

It was chemicals’ second straight week among the Bottom Five, having also been there with a 0.16% loss during the Jan. 12 week.

However, before that, the chemical makers had been among the Top Five in three weeks out of the prior five, with gains of 1.63% in the Jan. 5 week, 0.65% in the Dec. 22 week – the best of any major sector that week – and 0.68% in the week ended Dec. 8.

Other sectors posting notable losses last week included miscellaneous retailing (down 0.55%), transportation equipment manufacturing (down 0.36%), energy exploration and production (down 0.32%) and automotive services (down 0.28%).

It was the second week in a row among the Bottom Five for the automotive services grouping, which had also been there during the Jan. 12 week with a 0.14% deficit.

However, miscellaneous retailing and energy E&P were both previously among the big winners.

The retailers, in fact, had been the best-performing large-sized sector in both the Jan. 12 and Jan. 5 week, jumping by 0.69% and 2.05%, respectively, and was also in the Top Five during the Dec. 22 week with a 0.31% advance.

Energy E&P, meanwhile, had been among the top finishers in five weeks out of the prior six.

Food stores best YTD

On a year-to-date basis after three weeks’ time, the food stores sector took over as the top cumulative performer with a 3.12% return.

Coal mining – the weekly leader, as noted – was second-best on the year for a third straight week, returning 2.67%.

They were followed by third-best miscellaneous retailing (up 2.28%), which had been the top YTD performer over the previous two weeks; fourth-best oil and natural gas extraction (up 1.96%) and fifth-best health care (up 1.57%).

On the downside, paper manufacturing (down 0.97%) was the year-to-date cellar-dweller for a third straight week, with precision instrument manufacturing (down 0.23%) second-worst and non-depository credit institutions (down 0.11%) third-worst on the year so far, both also in those respective positions for a third week in a row.

Those were the only three major sectors showing losses for the year so far.

Food manufacturing (up 0.06%) was fourth-worst on the year, while insurance carriers (up 0.07%) were fifth-worst on the year for the second time in the last three weeks.

© 2015 Prospect News.
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