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Credit Insights

Commodity Issuers' Slumping Bond Prices Make the Headlines, but Media Sector Quietly Underperforms Even More

Strategic M&A activity in health-care sector remains robust.

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Friday's employment report was generally upbeat and in line with expectations, with 215,000 jobs added during July. The report also indicated that full-time jobs as a percentage of total employment rose to 81.7%, the highest reported level since November 2008, while the unemployment rate held at 5.3% last month. Job growth was led by the retail and business service sectors as well as health care and hospitality. However, the energy and mining sectors continued to shed workers, and the labor participation rate remained mired at 62.6%. Meanwhile, the Institute for Supply Management Purchasing Managers Index ticked lower in July to 52.7 from 53.5 in June. A reading above 50 indicates economic expansion, whereas below 50 indicates contraction. The ISM attributed the softness to uncertainty around international markets as well as the ongoing weakness in energy and commodities.

Commodities' recent price rout continued last week as oil retested its lows from earlier this year and copper traded down to prices not seen since 2009. In the Morningstar Corporate Bond Index, the average spread in the basic industries sector widened out 7 basis points to +243 and the energy sector widened out 9 basis points to +226. Overall, the average spread of our investment-grade index widened 4 basis points to +164. This is the widest level the index has reached over the past two years.

David Sekera does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.