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.
Credit Suisse AG
Credit Suisse AG is one of the world's leading financial services providers and is part of the Credit Suisse group of companies (referred to here as 'Credit Suisse'). As an integrated bank, Credit Suisse offers clients its combined expertise in the areas of private banking, investment banking and asset management. Credit Suisse provides advisory services, comprehensive solutions and innovative products to companies, institutional clients and high-net-worth private clients globally, as well as to retail clients in Switzerland. Credit Suisse is headquartered in Zurich and operates in over 50 countries worldwide. The group employs approximately 47,760 people. The registered shares (CSGN) of Credit Suisse's parent company, Credit Suisse Group AG, are listed in Switzerland and, in the form of American Depositary Shares (CS), in New York. Further information about Credit Suisse can be found at www.credit-suisse.com.
In its Asset Management business, Credit Suisse offers products across a broad spectrum of investment classes, including hedge funds, credit, index, real estate, commodities and private equity products, as well as multi-asset class solutions, which include equities and fixed income products. Credit Suisse's Asset Management business manages portfolios, mutual funds and other investment vehicles for a broad spectrum of clients ranging from governments, institutions and corporations to private individuals. With offices focused on asset management in 19 countries, Credit Suisse's Asset Management business is operated as a globally integrated network to deliver the bank's best investment ideas and capabilities to clients around the world.
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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 for the use of the recipient. It does not constitute an offer or an invitation by or on behalf of Credit Suisse to any person to buy or sell any security. Any reference to past performance is not a guide to future performance. The information and analysis contained in this publication have been compiled or arrived at from sources believed to be reliable but Credit Suisse does not make any representation as to their accuracy or completeness and does not accept liability for any loss arising from the use hereof.
Certain information contained in this document constitutes "Forward-Looking Statements" (including observations about markets and industry and regulatory trends as of the original date of this document), which can be identified by the use of forward-looking terminology such as "may", "will", "should", "expect", "anticipate", "target", "project", "estimate", "intend", "continue" or "believe", or the negatives thereof or other variations thereon or comparable terminology. Due to various risks and uncertainties beyond our control, actual events, results or performance may differ materially from those reflected or contemplated in such forward-looking statements. Readers are cautioned not to place undue reliance on such statements. Credit Suisse has no obligation to update any of the forward-looking statements in this document.
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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