Advantage Data: Junk posts third straight gain after recent loss, now up eight of last 10 weeks

By Paul Deckelman

New York, July 11 – The junk bond market moved higher last week, its third consecutive week on the rebound following a dramatic loss seen during the week ended June 17, according to the latest sector-tabulated bond-performance statistics supplied to Prospect News on Monday by Advantage Data Inc.

That loss had been the first after five straight weeks on the upside before that, dating back to the week ended May 13.

Its most recent loss before that, during the week ended May 6, had, in turn, broken a winning streak of 11 consecutive weekly gains going back to February.

In the last 10 weeks, gains have now been seen in eight of them.

On a somewhat longer-term basis, in the 27 weeks since the start of the year, gainers have dominated in 20 of those weeks, versus seven weeks in which more negatives were seen.

A subset consisting of the 33 largest sectors (out of the total of 62 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 all 33 of those bigger sectors finishing in the black last week, with none ending in the red.

It was the second straight weekly clean sweep, there having been an identical 33-0 positive breakdown during the week ended July 1. Those two weeks represented an improvement from the week before, ended June 24, during which 21 of those sectors had posted gains, with 12 others showing losses.

That modestly positive return stood in contrast to the breakdown during the June 17 week, when fully 31 of those sectors had been in negative territory, against just two of the sectors ending on the positive side of the fence.

That, in turn, had been a near-complete reversal from the week ended June 10, when 32 of those sectors had posted gains for the week and only one had suffered a loss.

Among specific large-sized sectors last week, chemical manufacturing was the top performer.

Real estate, on the other hand, turned in the worst performance for a second consecutive week, though it was tied for that unwanted honor with building construction.

For the year to date, metals mining had the best cumulative return of any large-sized sector for a 19th consecutive week, while chemical manufacturing – despite its strong performance on the week – made the worst cumulative showing.

Chemicals bubble to the top

Among specific large-sized sectors, chemical manufacturing (up 1.68%) was the top performer last week, as noted, despite not having been among the leaders in recent weeks.

Also showing strength last week were metals mining (up 1.48%), midstream energy services (up 1.21%), amusement and recreation services (up 1.14%) and the health care and primary metals processing sectors, both of which were up by 1.13%.

It was the second straight week that midstream energy finished among the Top Five best-performing large-sized sectors, having also been there during the July 1 week with a 1.41% return and it was the third week in a row there for metals mining, with returns of 1.93% in the June 24 week and 1.68% in the July 1 week.

Amusements, health care and metals processing had not been among the recent weekly leaders.

Real estate retreat continues

With all of the 33 large-sized sectors ending last week in the black for a second consecutive week, as noted, there again was no downside as such last week, with the latest Bottom Five list of the worst-performing large-sized sectors therefore once more made up solely of the sectors posting the smallest gains.

For a second week in a row, real estate (up 0.25%) was in that unenviable position, having also been there the week before with an anemic 0.16% return.

However, the sector was tied last week with building construction, which also managed no more than a 0.25% gain.

It was the second week in the last three for building construction in the Bottom Five.

Other sectors showing only modest gains included depository financial institutions (up 0.28%), automotive services (up 0.30%) and insurance carriers (up 0.39%), none of which had been among the underachievers in recent weeks.

Metals mining tops on year

On a year-to-date basis, the best and the worst performers from the July 1 week stayed in the same positions, relative to one another, last week. They had also been in that exact same order of finish the week before that, ended June 24.

With 27 trading weeks in the books so far for 2016, metals mining (up 50.67%) remained as the best-performing large-sized sector on a cumulative basis for an 19th straight week.

Energy exploration and production (up 32.67%) was in the runner-up spot for a sixth consecutive week.

Oil and gas extraction (up 28.33%) was third-best year to date for a third straight week.

Coal mining (up 26.35%) was fourth-best, also for a third week in a row.

Primary metals processing (up 23.68%) was fifth-best on the year for a fifth week.

As noted, metals mining and primary metals processing also among the week’s Top Five strongest large-sized performers.

Chemicals worsen to weakest

On the downside, chemical manufacturing (up 3.59%) tumbled by one position into the year-to-date cellar after having been just second-worst on the year for three straight weeks before that and in four weeks out the previous five.

That fall occurred despite the sector’s best-in-the-index weekly performance, as noted.

Holding companies and other investment offices (up 3.73%) fell down into that vacant second-worst slot despite having not been among the worst cumulative performers recently.

Automotive services (up 3.82%) remained parked at third-worst on the year for a fourth successive week.

Depository financial institutions (up 4.25%) were fourth-worst on the year, also for a fourth straight week.

Food stores (up 5.20%) improved by four notches on the week, relatively speaking, and were only fifth-worst on the year so far, after having been the worst cumulative performer for the previous four straight weeks.

Depository financial institutions and automotive services, as noted, were also among the weekly Bottom Five.

© 2015 Prospect News.
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