NEW YORK, Aug. 11, 2015 /PRNewswire/ -- Commodities were
lower in July, driven by macroeconomic factors and supply
fundamentals, according to Credit Suisse Asset Management.
The Bloomberg Commodity Index Total Return performance was
negative for the month, with 21 out of 22 Index constituents
trading lower.
Credit Suisse Asset Management observed the following:
- Energy was the worst performing sector, down 14.47%, led lower
by WTI Crude Oil. In addition to continued increased OPEC
production, towards the end of the month there was also a slight
rise in U.S. rig counts.
- Agriculture decreased 11.11%, led lower by Kansas City Wheat
and Chicago Wheat as limited rainfall in the U.S. Midwest supported
harvest progress. Sugar also weighed on the sector as recent
rainfall in Thailand contradicted
expectations that El Nino would limit sugar crop growth.
- Industrial Metals declined 7.30%, led lower by Copper as
concerns that the recent volatile decline in the Chinese equity
market may further dampen economic growth, decreasing demand
expectations for the sector.
- Precious Metals ended the month 6.37% lower. Improved U.S.
economic data, including lower jobless claims and higher housing
starts, bolstered expectations that the Federal Reserve may raise
interest rates later this year as the economy continues to recover.
The prospect of higher interest rates strengthened the U.S. dollar
and reduced safe haven demand for gold and silver.
- Livestock decreased 2.17%, led lower by Live Cattle, as the
United States Department of Agriculture reported further supply
increases compared to the same time last year.
Nelson Louie, Global Head of
Commodities for Credit Suisse Asset Management, said: "Major
macroeconomic headlines, such as the Greek debt negotiations and
the decline in Chinese equity markets, raised global growth
concerns. Although the turmoil surrounding the impasse in
Greece impacted consumer
confidence across the Eurozone, preliminary Purchasing Managers'
Index data showed that economic growth in Europe only lost slight momentum in July. The
European Central Bank's easing measures may continue to support
future growth prospects. In China,
economic data reflected declines in the manufacturing sector amid
decreased consumer demand and weakened equity market conditions.
However, the Chinese government has also shown resolve in its
commitment to supporting the economy through various stimulus
measures."
Christopher Burton, Senior
Portfolio Manager for the Credit Suisse Total Commodity Return
Strategy, added, "Meanwhile, in the U.S., inflation expectations
remain below the U.S. Federal Reserve's 2% target. However, the
pace of economic progress in the U.S. versus the rest of the world
increased expectations of divergent central bank policy.
Macroeconomic factors may also continue to affect commodity demand
expectations. So far, in the current phase of the business cycle,
most U.S. asset classes have outperformed relative to non-U.S.
asset classes. Central bank efforts may broaden the economic
recovery into other regions, which may be supportive of commodity
demand longer-term."
About the Credit Suisse Total Commodity Return
Strategy
Credit Suisse's Total Commodity Return Strategy is managed by a
team with over 28 years of experience, 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 July 31, 2015, the Team
managed approximately USD 10.0
billion in assets globally.
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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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