NEW YORK, July 12, 2016 /PRNewswire/ -- Commodities
increased in June, driven by supply/demand factors and
macroeconomic events, according to Credit Suisse Asset
Management.
The Bloomberg Commodity Index Total Return performance was
positive for the month, with 13 out of 22 Index constituents
posting gains.
Credit Suisse Asset Management observed the following:
- Precious Metals was the best performing sector, up 10.60%, led
by Silver, as uncertainty due to the UK's vote to leave the EU
contributed to a flight to safety. This increased expectations that
the US Federal Reserve (Fed) may be less likely to raise interest
rates this summer.
- Industrial Metals gained 6.76%, with all sector commodities
yielding positive returns. Nickel led base metals higher as planned
strikes in Colombia and warnings
of mine closures in the
Philippines heightened concerns over potential supply
disruptions.
- Energy increased 2.93%, led by Natural Gas. Forecasts of warmer
weather helped to reduce concerns over elevated end-of-season
storage levels.
- Agriculture ended 1.78% higher. Coffee gained the most after
heavy rains in Brazil's key
growing regions damaged crop conditions in densely planted areas,
drastically reducing the 2017 supply outlook. Sugar also increased
amid continued below-average rainfall in India, potentially reducing production.
- Livestock was the worst performing sector, down 0.73%, led
lower by Live Cattle, as the US Department of Agriculture reported
higher cattle production figures during the middle of the month
compared to the same period last year.
Nelson Louie, Global Head of
Commodities for Credit Suisse Asset Management, said: "The UK's
decision to leave the EU has resulted in higher levels of
volatility, furthering the expectations of loose monetary measures
globally. Although strong US economic data had previously increased
expectations for the Fed to raise interest rates this year, the
timing of any rate hike will likely be delayed. Despite previous
trends of policy divergence, this has resulted in both US and
non-US central banks pursuing a course of potential further
stimulus actions, remaining committed to increasing inflation to
healthy levels as well as to propelling sustainable economic
growth."
Christopher Burton, Senior
Portfolio Manager for the Credit Suisse Total Commodity Return
Strategy, added: "The potential for a La Niña event later this
summer may further tighten supply expectations across agricultural
commodities. Geopolitical risks abroad may continue to impact
energy-related commodities. Although the effects of recent supply
outages may have eased, the supply/demand gap continues to narrow.
With limited OPEC spare capacity, any geopolitical disruptions
and/or unexpected outages may lead to potential supply shocks.
Against such a backdrop, as the potential for weather-related
disruptions and geopolitical concerns remain elevated, commodities
as an asset class may help to diversify overall portfolio
risk."
About the Credit Suisse Total Commodity Return
Strategy
Credit Suisse's Total Commodity Return Strategy is
managed by a team with over 29 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 June 30, 2016, the Team
managed approximately USD 8.7 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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