NEW YORK,
Feb. 10, 2016 /PRNewswire/
-- Commodities decreased in January, largely driven by
fundamental factors, according to Credit Suisse Asset
Management.
The Bloomberg Commodity Index Total Return performance was
negative for the month, though with mixed performance among
individual constituents. 11 out of 22 Index constituents yielded
losses.
Credit Suisse Asset Management observed the following:
- Energy was the worst performing sector, down 7.31%. Gasoline
declined the most amid increasing inventories in the U.S. even as
refineries, which had been operating well above normal levels,
entered turnaround season. Crude oil and petroleum products
continued their sharp decline due to excess global inventories,
which were further exacerbated by the return of Iranian exports
after sanctions were eased.
- Industrial Metals declined 1.39%, led lower by Copper, due to
decreased demand expectations after China's producer inflation data came in below
expectations, and manufacturing data continued to indicate
contraction.
- Agriculture decreased slightly, down 0.81%. Sugar declined the
most as forecasts for rain in Brazil's key producing regions improved the
outlook for growing conditions toward the end of the month. Coffee
was also lower on increased production estimates from Vietnam, Indonesia and Colombia.
- Livestock gained 1.34% for the month, led by Lean Hogs as the
U.S. Department of Agriculture reported increases in pork exports
out of the U.S. throughout the month.
- Precious Metals was the best performing sector, up 4.76%,
Demand for safe haven assets increased amid volatility among
financial markets, continued unease over China's economy and increased expectations for
easier monetary policies from multiple major central banks.
Nelson Louie, Global Head of
Commodities for Credit Suisse Asset Management, said: "The year got
off to a volatile start, as continued growth concerns drove U.S.
government bond yields and stocks sharply lower. Although these
concerns also weighed on commodities, the asset class rallied
during the second half of the month, largely driven by crude oil
and petroleum products. While sanctions against Iran eased, allowing for oil exports, it may
take time for Iranian production to ramp up significantly.
Meanwhile, there were signs that the over-supply situation in oil
may begin to reverse. Pressure on oil producers intensified as
prices continued to decline, leading some companies to issue debt
or equity, cut dividends and/or capital expenditures. Supply may
need to be cut further if prices remain low."
Christopher Burton, Senior
Portfolio Manager for the Credit Suisse Total Commodity Return
Strategy, added, "Commodity returns may continue to be impacted by
announcements from central banks if stagnant growth and market
turmoil persist, undermining the effectiveness of their policies so
far. In January, the European Central Bank hinted at further
stimulus measures, while the Bank of Japan unexpectedly introduced negative
interest rates. Within the U.S., a decline in consumer prices for
December decreased future inflation expectations. The U.S. Federal
Reserve remains likely to pursue an even slower course of monetary
tightening. The market has already rapidly reduced its expectations
for further interest rate increases throughout 2016. Continued
loose monetary policy expectations for major central banks may lead
to inflation risk, should economic growth exceed
expectations."
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 January 31, 2016, the Team
managed approximately USD 7.7 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 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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