Advantage Data: Junk posts fourth straight gain after recent loss, up in nine out of last 10 weeks

By Paul Deckelman

New York, July 18 – The junk bond market moved higher last week, its fourth consecutive week on the rebound following a dramatic plunge 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 nine of them.

On a somewhat longer-term basis, in the 28 weeks since the start of the year, gainers have dominated in 21 of those weeks, versus seven weeks in which more negatives were seen.

As noted, 11 of those better weeks came during the long winning streak which began during the week ended Feb. 19 and then had extended through the week ended April 29. Besides that lengthy string of gains, and the recent improvements, the sectors had also done better during the week ended Jan. 29 – after having started the new year with three straight weeks on the downside and then ultimately racking up losses in five out of the first six weeks of the year.

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 third straight weekly clean sweep, there having been identical 33-0 positive breakdowns during the weeks ended July 1 and July 8. The past three weeks represent 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, midstream energy services was the top performer.

Food manufacturing, on the other hand, turned in the worst performance, meaning the smallest weekly return.

For the year to date, metals mining had the best cumulative return of any large-sized sector for a 20th consecutive week, while food stores made the worst cumulative showing.

Midstream energy top mover

Among specific large-sized sectors, midstream energy services (up 1.74%) was the top performer last week, as noted. It was the sector’s third straight finish among the Top Five best-performing sectors, having also been there during the weeks ended July 1 and July 8, with returns of 1.41% and 1.21%, respectively.

Also showing strength last week were oil and natural gas extraction (up 1.66%), metals mining (up 1.58%), (up 1.49%) and printing and publishing (up 1.46%).

It was the second straight week among the elite finishers for primary metals processing, and the fourth straight week there for metals mining, which had returns of 1.13% and 1.68% in the July 8 week.

Oil and gas extraction, while missing the cut that week, has now been among the best finishers in three week out of the last four.

Printing and publishing has not recently been among the leaders.

Food manufacturers weakest

With all of the 33 large-sized sectors ending last week in the black for a third 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.

Food manufacturing (up 0.34%) had the smallest return. It has not recently been among the worst performers.

Also posting unusually small returns, relative to the other sectors, were non-depository credit institutions (up 0.47%), real estate (up 0.52%), securities and commodities brokers, dealers and exchanges (up 0.55%) and miscellaneous retailing (up 0.56%).

It was the third straight week among the laggards for real estate, which in fact turned in the smallest return in each of the previous two weeks – up 0.16% in the July 1 week and 0.25% in the July 8 week).

None of the other aforementioned sectors were among the worst weekly performers recently.

Metals mining tops on year

On a year-to-date basis, with 28 trading weeks in the books so far for 2016, metals mining (up 52.72%) remained as the best-performing large-sized sector on a cumulative basis for a 20th straight week.

Coal mining (up 32.93%) moved up two notches in the rankings to second-best, after having been fourth-best over the previous three weeks.

Coal thus displaced energy exploration and production (up 29.26%), which retreated one notch to just third place, after having been in the runner-up spot the previous six consecutive weeks.

That in turn pushed oil and gas extraction (up 28.64%) down one notch to just fourth-best on the year, after having been third-best year to date for the previous three straight weeks.

Primary metals processing (up 26.10%) was fifth-best on the year for a sixth week in a row.

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

Food stores falter

On the downside, food stores (up 3.62%) tumbled by four notches on the week into the cellar after having been just fifth-worst the previous week – but the grocers have now been in that unenviable position in five weeks out of the last six.

Automotive services (up 4.54%) fell to second-worst after having been only third-worst for the previous four weeks.

Chemical manufacturing (up 4.74%) improved by two places in the standings, to third-worst, after having been the single worst year-to-date performer the prior week.

Depository financial institutions (up 5.06%) were fourth-worst on the year for a fifth straight week.

Real estate (up 5.66%) fell to fifth-worst on the year, after not having previously been among the big cumulative losers.

It was the only one of the cumulative losers to also be among the weekly Bottom Five.

© 2015 Prospect News.
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