Advantage Data: Junk sectors continued rise last week with 11th straight gain

By Paul Deckelman

New York, Oct. 30 – The junk bond market maintained its recent upside momentum last week, ended Oct. 27, according to the latest sector-tabulated bond-performance statistics supplied to Prospect News on Monday by Advantage Data Inc.

It posted its 11th consecutive upturn, dating back to the week ended Aug. 18.

Its most recent downturn was seen the week before that, ended Aug. 11, when the sectors had been down decisively. That loss had been the first loss the sectors had seen since the week ended July 7, snapping a prior four-week winning streak.

For the year to date, a majority of the sectors have finished on the plus side in 36 weeks so far, while losses have dominated in just seven weeks.

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 18 of those sectors ending in the black last week, with 15 finishing in the red.

That was a definite weakening of the strong trend seen over the three previous weeks, ended Oct. 6, Oct. 13 and Oct. 20; during each of those weeks, 27 of the key sectors had posted gains, against just six sectors showing losses.

In contrast, during the most recent losing week – the Aug. 11 week, as noted – fully 31 of the large-sized sectors were in retreat, and only two of the sectors managed to eke out tiny advances.

Among specific large-sized sectors during the week ended Oct. 27, food stores led all the sectors, while miscellaneous retailing was at the absolute bottom of the pile – after having been the top performer during the previous week.

On a year-to-date basis, with 43 weeks of 2017 now in the books, metals mining moved into the top spot on a cumulative basis, displacing lodging, which had been the champion for the previous 13 straight weeks, while food stores – despite the industry grouping’s solid weekly performance – fell to the bottom.

Food stores firm up

As noted, the food stores category – despite its relatively weak showing on a cumulative basis – was the top-performing large-sized sector during the Oct. 27 week, returning 0.46% during that period.

It was a solid rebound for the grocers, who had been among the Bottom Five worst-performing sectors during the Oct. 20 week with a 0.16% loss.

That was the exception to what has recently been the rule; food stores have now been among the Top Five best performers in three weeks out of the last four, including the Oct. 6 and Oct. 13 weeks, when the sector topped all of the others, with gains of 0.81% and 0.75%, respectively.

Other sectors showing strength in the most recent week included petroleum refining (up 0.34%), electric and natural gas utilities (up 0.31%), depository financial institutions (up 0.29%) and energy exploration and production (up 0.26%).

It was the second time in three weeks that E&P was among the elite finishers, having also made it during the Oct. 13 week, when it rose by 0.39%.

The refiners, on the other hand, had been among the big losers the week before; in fact the sector’s 0.58% loss that week was the worst of any of the large-sized sectors.

Retailers go first to worst

On the downside, miscellaneous retailers had the biggest loss among any of the major sectors last week, falling by 0.89%.

The sector thus had the unwanted distinction of having gone from first to worst; during the Oct. 20 week, the retailers had been the single best finisher, gaining 0.91%.

And demonstrating its recent volatility, the sector had again been the absolute worst performer in the Oct. 13 week, with a 0.61% deficit, and went from there into the top spot the following week, and then back.

Other notable losers during the week included paper manufacturing (down 0.45%) and three sectors each sliding by 0.43% on the week – coal mining, industrial machinery and computer manufacturing and oilfield services.

It was the second straight week among the underachievers for oilfield services, which had also been in that group the week before with a 0.12% loss.

And it was the papermakers’ sixth straight week among the Bottom Five. The sector had also been there the previous week with a 0.27% loss, and it had been the single worst large-sized performer during the weeks ended Sept. 29 and Oct. 6, posting losses of 0.27% and 0.72%, respectively.

Metals mining tops for year

On a year-to-date basis, metals mining (up 10.31%) was the top cumulative performer, moving up to the top spot after having only been the fourth-strongest finisher the week before.

It thus supplanted – and traded places with – lodging (up 8.84%), which fell to just fourth-best on the year after an eye-popping 13 straight weeks at the top before that.

Amusement and recreational services was the year-to-date runner-up with a 9.77% cumulative return, having moved into second place after having been only fifth-best in two weeks out of the previous three.

Primary metals processing (up 9.28%) was third best on the year for a third week in a row.

After lodging, as mentioned, depository financials (up 8.78%) moved up to fifth-best on the year.

Food stores off on year

On the downside, food stores, despite the sector’s decent performance on the week, as noted, fell to the bottom of the year-to-date ranking with a 0.98% loss, the only large-sized sector in the red on a cumulative basis.

It fell to the bottom after having only been second-worst the previous week, but has now been the cellar-dweller in four weeks out of the last five.

It thus traded places with miscellaneous retailing (up 0.08%), which improved relatively speaking, to just second-worst year to date from absolute worst. The retailers have now been second-worst in four weeks out of the last five.

Coal mining (up 1.86%) was third-worst on the year for a third straight week.

Oil and gas extraction (up 3.90%) was fourth-worst on the year, while energy E&P (up 3.99%) was fifth-worst, trading places from their relative positions the week before.

© 2015 Prospect News.
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