Advantage Data sees junk rebounding from previous week’s loss

By Paul Deckelman

New York, Aug. 8 - The junk bond market bounced back last week from its dip downwards the week before, according to the latest sector-tabulated bond-performance statistics supplied to Prospect News on Monday by Advantage Data Inc.

That loss in the week ended July 29 had been the junk market’s first downturn after five consecutive weeks of gains stretching back to mid-June. Its most recent loss before that, during the week ended June 17, had, in turn, broken a winning streak of five consecutive weekly gains going back to mid-May.

Gains have now been seen in eight weeks out of the last 10.

On a somewhat longer-term basis, in the 31 weeks since the start of the year, gainers have dominated in 23 of those weeks versus eight weeks in which more negatives were seen.

Eleven of those better weeks came during a long winning streak which began during the week ended Feb. 19 and which then had extended through the week ended April 29, before being ended by a loss the following week, ended May 6. 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 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 23 of those bigger sectors finishing in the black last week, with seven sectors ending in the red and three sectors unchanged on the week, showing neither a gain nor a loss.

While that was a clear rebound from the July 29 week – when 18 of the bigger sectors had shown losses and 14 had shown gains, plus one sector unchanged – it was still something of a deterioration from the pattern of strength seen over the weeks before that loss, such as during the week ended July 22, when 28 of the bigger sectors had ended in positive territory, versus five sectors in negative territory. The three weeks before that gain, ended July 1, July 8 and July 15, had produced three consecutive dominating 33-0 clean sweeps.

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

Holding companies and other investment offices, on the other hand, had the biggest loss of any major sector.

For the year to date, metals mining had the best cumulative return of any large-sized sector for a 23rd consecutive week, while food stores turned in the worst cumulative showing for a fourth straight week and for an eighth week out of the last nine.

Lodging leads the way

Among specific large-sized sectors, lodging (up 1.79%) had the biggest gain of any significantly sized sector on the week.

It was the second straight week that the innkeepers had been among Top Five best-performing large-sized sectors, having also made it there during the July 29 week with 1.25% return.

Also showing strength in the most recent week were coal mining (up 1.11%), metals mining (up 0.70%), petroleum refining (up 0.48%) and telecommunications (up 0.43%).

It was the second consecutive week among the elite finishers for coal, which had actually been the top performer in the July 29 week with a 1.50% gain – thus accomplishing the relatively unusual feat of going from worst to first, having had the biggest loss during the week ended July 22, when the sector had been down by 1.24%.

None of the week’s other Top Five best finishers had been among that elite group over the past few weeks.

Holding companies hardest-hit

On the downside, the holding companies and other investment offices sector had the worst showing of any large-sized sector last week, when it was down by 0.72%.

Also among the Bottom Five worst-performing sectors on the week were wholesale durable goods distributors (down 0.33%), non-computer electronic equipment manufacturers (down 0.27%), chemical manufacturing (down 0.18%) and precision instrument manufacturing (down 0.12%).

The electronic equipment manufacturers had actually been part of the previous week’s Top Five with a 0.62% gain that week.

None of the week’s other underachievers had been among the worst performers over the past few weeks.

Metals mining still tops on year

On a year-to-date basis, all of the leaders during the July 29 week continue to hold the exact same positions last week.

With 31 trading weeks in the books so far for 2016, metals mining (up 55.62%) remained as the best-performing large-sized sector on a cumulative basis for a 23rd straight week.

Coal mining (up 30.01%) was in the runner-up slot for a second straight week and for a third week out of the last four.

Primary metals processing (up 28.24%), energy exploration and production (up 25.25%) and oil and natural gas extraction (up 24.52%) were each third-best, fourth-best and fifth-best on the year so far, respectively, for a second week in a row.

Coal mining and metals mining, as noted, were also among the week’s best finishers last week.

Food stores faltering

On the downside, food stores (up 2.59%) had the smallest year-to-date return of any major sectors for a fourth straight week and for eight weeks out of the last nine.

Chemical manufacturing (up 4.03%) and automotive services (up 5.40%), were second worst and third worst on the year so-far on the year, respectively, for a second straight week.

The depository financial institutions sector (up 5.56%) was fourth worst on the year for a seventh straight week.

Wholesale durable goods distributors (up 6.10%) fell to fifth worst on the year, despite not having recently been among the cumulative underperformers.

As noted, the chemical manufacturers and wholesale goods distributors were also among the weekly Bottom Five.

© 2015 Prospect News.
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