Advantage Data: Junk sectors broadly lower last week, second loss in last three weeks

By Paul Deckelman

New York, Feb. 5 – The junk bond market fell badly last week (ended Feb. 2), its second such downturn in the last three weeks, according to the latest sector-tabulated bond-performance statistics supplied to Prospect News on Monday by Advantage Data Inc.

However, it was still only the third week in the last 10, dating back to the week ended Dec. 1, 2017, that more sectors had shown losses than gains, with the winners outnumbering the losers in the other seven of those weeks.

The sectors had also finished mostly negative during the week ended Jan. 19; 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 second week in the new 2018 calendar year in which the losers outnumbered the gainers, versus three weeks on the upside – the weeks ended Jan. 26, Jan. 12 and Jan. 5.

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 all 33 of those sectors ending in the red last week, with none of them having finished in the black.

That was a stark contrast to the Jan. 26 week, when 30 of those sectors had shown gains and only three had posted losses.

That, in turn, was a solid comeback from the Jan. 19 week, when 22 of the sectors had ended the week on the downside, just 10 had finished on the upside and one sector – amusement and recreation services – had shown neither a gain nor a loss on the week.

Among specific large-sized sectors during the week ended Feb. 2, energy exploration and production suffered the biggest loss, while printing and publishing was the best performer, relatively speaking, with the smallest weekly deficit.

On a year-to-date basis five weeks into the new year, food stores led the way, while paper manufacturing was at the bottom of the pile for a fifth straight week.

Energy E&P plunges the most

Energy exploration and production, as noted, was the worst performer last week among the large-sized sectors, nosediving by 1.37%.

That was a marked reversal from the previous week, ended Jan. 26, when the sector was among the Top Five best-performing large-sized sectors, sporting a 0.58% weekly return.

However, E&P has now also been among the Bottom Five worst-performing major sectors in two weeks out of the last three, having also had that dubious honor in the Jan. 19 week, when it lost 0.32%.

Other sectors showing sizable losses last week were oil and natural gas extraction (down 1.35%), chemical manufacturing (down 0.98%), oilfield services (down 0.97%) and amusement and recreation services (down 0.93%).

Like the E&P sector, oil and gas extraction had also been part of the Top Five during the Jan. 26 week, when it had returned 0.62%.

But unlike E&P, it had not recently been among the worst losers; instead, it had been in the Top Five over a stretch of four weeks out of the previous five, dating back to the week ended Dec. 29.

Before last week, oilfield services had also recently been hanging out among the stronger performers in two weeks out of the previous three, including the Jan. 26 week, when its 1.09% return was the best of any of the major sectors.

On the other hand, the chemical makers have now been among the Bottom Five in three weeks out of the last four, including the Jan. 19 and Jan. 12 weeks, when the sector had lost 0.58% and 0.16%, respectively. Before that recent losing streak, though, chemicals had been part of the Top Five in three weeks out of the prior five.

Printers have smallest loss

With all 33 of the biggest sectors having shown losses last week, there was no upside as such.

Instead, the Top Five was composed of the sectors showing the smallest losses among their peers, led by printing and publishing, which was down 0.13% on the week.

It was the grouping’s second week out of the last three in the Top Five, having also been there during the Jan. 19 week, when it had gained 0.24%.

Other sectors showing relative strength in a decidedly negative week by posting only modest losses last week included wholesale durable goods distributors (down 0.17%), primary metals processing (down 0.22%), precision instrument manufacturing (down 0.24%) and industrial machinery and computer equipment manufacturing (down 0.26%).

The latter sector was among the elite finishers for a second consecutive week, having also made the Top Five in the Jan. 26 week with a 0.73% advance.

Food stores best, paper worst

On a year-to-date basis after five weeks’ time, the food stores sector reclaimed the top spot with a 2.96% return so far, its second time in the last three weeks in that Number-One position.

Coal mining – which had temporarily displaced the grocers during the Jan. 26 week – returned to its more familiar position in the runner-up slot for the fourth time in the last five weeks, with a 1.81% cumulative return.

They were followed by oil and gas extraction (up 1.27%), now third-strongest for a second straight week and in three weeks out of the last four.

Oilfield services and miscellaneous retailing tied for fourth-best last week, each returning 1.26% on the year so far. It was oilfield services’ second straight week in the Number-Four position.

On the downside, paper manufacturing (down 0.98%) was the year-to-date cellar-dweller for a fifth straight week.

Automotive services (down 0.55%) was second-worst on the year, with precision instrument manufacturing (down 0.44%) third-worst.

Food manufacturing (down 0.41%) was fourth-worst on the year so far, with non-depository credit institutions (down 0.40%) fifth-worst on a cumulative basis.

© 2015 Prospect News.
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