NEW YORK, June 9, 2015 /PRNewswire/ -- Commodities were
lower in May, driven by supply fundamentals and macroeconomic
factors, according to Credit Suisse Asset Management.
The Bloomberg Commodity Index Total Return performance was
negative for the month, with 15 out of 22 Index constituents
trading lower.
Credit Suisse Asset Management observed the following:
- Industrial Metals was the worst performing sector, down 7.70%,
as a continued weak economic growth outlook for China weighed on demand expectations.
- Agriculture declined 3.50%, led lower by softs, as a weaker
Brazilian Real incentivized exports of sugar, coffee and soybeans.
In addition, heavy rainfall improved the coffee harvest outlook in
Brazil and Colombia, increasing supply expectations.
- Energy finished the month 2.13% lower, led by Natural
Gas. Inventories rose more than expected towards the end of
the month, and forecasts for moderate weather across the U.S.
decreased cooling demand expectations.
- Livestock gained the most, up 2.34%. In addition to Lean Hogs,
Live Cattle also ended the month higher following increased
wholesale beef demand. Furthermore, good pasture conditions
incentivized producers to hold back cattle, shrinking near term
supplies.
- Precious Metals increased 1.29%, buoyed by heightened
geopolitical risk and uncertainty over the Greek debt crisis,
supporting demand for silver and gold.
Nelson Louie, Global Head of
Commodities for Credit Suisse Asset Management, said: "Mixed
economic data continues to undermine the sustainability of a
pronounced global economic recovery. However, recent market and
economic indicators may hint that global industrial production
momentum, especially in both the Eurozone and the U.S., has
troughed and is set to accelerate. In the U.S., much of the
economic data reported in May, for the first quarter as well as for
April, was weaker than expected. First quarter GDP was revised
lower and indicated contraction, though weakness may have been due
to the extremely cold late winter weather, the West Coast port
shutdown and the sharply stronger U.S. dollar. However, a number of
key indicators remained healthy. Unemployment continued to decrease
to near full employment, and new home sales bounced back in April
to near the highest levels since 2008."
Christopher Burton, Senior
Portfolio Manager for the Credit Suisse Total Commodity Return
Strategy, added, "The U.S. Federal Reserve appears to be growing
closer to tightening interest rates, with U.S. core inflation
running near its target, along with broad measures of unemployment.
European and Japanese central banks continue to utilize policies
designed to stimulate, while China's policy remains more ambiguous, but
seems willing to ease as necessary. An increase in global inflation
is increasingly likely amid such a backdrop. Volatility across
multiple asset classes also seems set to continue. As such, we
believe investors may derive long-term diversification benefits in
conjunction with potential inflation protection through a strategic
allocation to commodities."
About the Credit Suisse Total Commodity Return
Strategy
Credit Suisse's Total Commodity Return Strategy
has been managed for over 28 years and seeks to outperform the
return of a commodities index, such as the Bloomberg Commodity
Index Total Return or the S&P GSCI Total Return Index, using
both a quantitative and qualitative commodity research process.
Commodity index total returns are achieved through:
- Spot Return: price return on specified commodity futures
contracts;
- Roll Yield: impact due to migration of futures positions from
near to far contracts; and
- Collateral Yield: return earned on collateral for the
futures.
As of May 31, 2015, the Team
managed approximately USD 11.1
billion in assets globally.
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Important Legal Information
This document was produced
by and the opinions expressed are those of Credit Suisse as of the
date of writing and are subject to change without obligation to
update. It has been prepared solely for information purposes and
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Certain information contained in this document constitutes
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Certain risks relating to investing in Commodities and
Commodity-Linked Investments:
Exposure to
commodity markets should only form a small part of a diversified
portfolio. Investment in commodity markets may not be suitable for
all investors. Commodity investments will be affected by changes in
overall market movements, commodity volatility, exchange-rate
movements, changes in interest rates, and factors affecting a
particular industry or commodity, such as drought, floods, weather,
livestock disease, embargoes, tariffs and international economic,
political and regulatory developments. Commodity markets are highly
volatile. The risk of loss in commodities and commodity-linked
investments can be substantial. There is generally a high degree of
leverage in commodity investing that can significantly magnify
losses. Gains or losses from speculative derivative positions may
be much greater than the derivative's original cost. An investment
in commodities is not a complete investment program and should
represent only a portion of an investor's portfolio management
strategy.
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SOURCE Credit Suisse AG