Advantage Data: Junk sectors bounced back last week from first 2018 loss

By Paul Deckelman

New York, Jan. 29 – The junk bond market bounced back solidly last week (ended Jan. 26) from its first losing week of 2018 (ended Jan. 19), according to the latest sector-tabulated bond-performance statistics supplied to Prospect News on Monday by Advantage Data Inc.

It was the fourth week in the last five and the eighth week in the last 10, dating back to the week ended Nov. 24, that more sectors had shown gains than losses.

Besides the downturn during the Jan. 19 week, the only other loss during that 10-week stretch had occurred during the week ended Dec. 22, which had snapped a five-week winning streak dating back to mid-November.

Last week was the third week in the new 2018 calendar year in which gainers outnumbered the losers, versus the one week on the downside, as noted.

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 30 of those sectors ending in the black last week, with only three sectors having finished in the red.

That was a stark contrast to the Jan. 19 week, when 22 of those sectors had shown losses, 10 had posted gains and one sector – amusement and recreation services – showing neither a gain nor a loss on the week.

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

Among specific large-sized sectors during the week ended Jan. 26, oilfield services had the strongest performance, while automotive services did the worst.

On a year-to-date basis four weeks into the new year, coal mining dominated, while paper manufacturing was at the bottom of the pile for a fourth straight week.

Oilfield services surge

Oilfield services was the strongest performer on the week among the large-sized sectors, jumping by 1.09%.

It was the second week in the last three that oilfield services has been among the Top Five best-performing large-sized sectors, having also made it there during the Jan. 12 week, when it had risen by 0.42%.

Other sectors showing strength during the Jan. 26 week included industrial machinery and computer equipment manufacturing (up 0.73%), oil and natural gas extraction (up 0.62%), energy exploration and production (up 0.58%) and food stores (up 0.55%).

It was the second straight week among the elite finishers for the grocers, who had also been there during the Jan. 19 week with a 0.37% gain; the supermarkets sector has now been among the Top Five in four weeks out of the last five, including the weeks ended Jan. 5 and Dec. 29, when the grouping had posted gains of 1.46% and 0.90%, respectively, with the latter being the best showing of any of the key sectors that week.

Oil and gas extraction was among the Top Five for the second time in three weeks, having also been there in the Jan. 12 week with a 0.66% advance, and for the fourth time in five weeks, including gains in the Jan. 5 and Dec. 29 weeks.

Energy E&P, on the other hand, had been among the Bottom Five worst-performing large-sized sectors during the Jan. 19 week, when it lost 0.32%).

However, it has still been in the Top Five in two weeks out of the last three, including its 0.55% rise in the Jan. 12 week.

Automotive services skids

On the downside, automotive services had the worst finish of any large-sized sector last week, falling by 0.24%.

It was the third straight week the grouping has been among the underachievers, having also been among the Bottom Five in the Jan. 19 and Jan. 12 weeks with losses of 0.28% and 0.14%, respectively.

Two other sectors ended up in the red last week, though barely – building construction and paper manufacturing, both of which eased by 0.03%.

The papermakers have now been in the Bottom Five in four weeks out of the last five, including losses in the Jan. 12, Jan. 5 and Dec. 29 week. The sector was the worst performer of any during the Jan. 5 week, when it fell by 0.30%.

With just three sectors actually showing losses last week, the Bottom Five was fleshed out by sectors posting unusually small gains – non-computer electrical and electronics manufacturing (up 0.02%) and miscellaneous retailing (up 0.05%).

It was the second straight week among the worst finishers for the retailers, who were also there during the Jan. 19 week with a 0.55% loss. Before that, though, the sector had been among the Top Five in three weeks out of four, including the weeks ended Jan. 12 and Jan. 5 when they had led all of the other sectors each week with gains of 0.69% and 2.05%, respectively.

Coal mining best, paper worst

On a year-to-date basis after four weeks’ time, the coal mining sector took over as the top cumulative performer with a 3.13% return, after having been in the runner-up slot for the previous three weeks.

That dropped previous leader food stores into second place with a 2.45% year-to-date return.

They were followed by third-best oil and gas extraction (up 2.63%), now in that spot in two weeks out of the last three; by fourth-best oilfield services (up 2.28%) and by fifth-best miscellaneous retailing (up 2.07%).

On the downside, paper manufacturing (down 1.03%) was the year-to-date cellar-dweller for a fourth straight week, with precision instrument manufacturing (down 0.25%) second-worst, also for a fourth week in a row.

Automotive services – the week’s big loser, as noted – was third-worst on the year, down 0.01%. Non-depository credit institutions (up 0.08%) was fourth-worst on the year, while food manufacturing (up 0.16%) has now been fifth-worst in two weeks out of the last three.

© 2015 Prospect News.
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