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Commodity Market Decreased in February Amid Mixed Macroeconomic Indicators

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NEW YORK, March 11, 2013 /PRNewswire/ -- Commodities were lower in February as renewed uncertainty weighed on markets.  

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Nelson Louie, Global Head of Commodities in Credit Suisse's Asset Management business, said, "Macroeconomic factors were mixed for February, though ultimately acted as a headwind for Commodities. A broad improvement in European manufacturing Purchasing Managers Indices was offset by a much weaker reading in Italy, along with concerns over Italy's recent election results.  Uncertainty following the Italian parliamentary elections took center stage at the end of the month and across commodity markets.  China's official PMI was also reported lower than expected for February.  The ensuing weak sentiment saw oil products and both base and precious metals decline.  US dollar strength driven by Euro weakness on the back of the PMI numbers and macroeconomic concerns also weighed on commodities." 

Christopher Burton, Senior Portfolio Manager for the Credit Suisse Total Commodity Return Strategy, added, "The rate of global growth remains a key to commodity performance.  As evidenced in February, headline risk will continue to play a role in short-term commodity market movements. Commodities could benefit from a rebound in global growth along with continued low interest rates.  US Federal Reserve Chairman Ben Bernanke strongly defended the US central bank's monetary stimulus policies before Congress, easing financial market worries over a possible early retreat from bond purchases.  Commodities have historically tended to outperform during periods of higher than expected inflation.  We believe investors will continue to derive long-term diversification benefits that commodities provide."

The Dow Jones-UBS Commodity Index Total Return was down by 4.09% in February.  Overall, 19 out of 22 index constituents posted negative returns.  Precious Metals was the worst performing sector, down 6.25%, despite US Federal Reserve Chairman Ben Bernanke's reaffirmation of his commitment to strong stimulus measures.  Industrial Metals decreased, down 5.63%, due to speculation over monetary tightening in China and questions regarding surpluses of some metals.  For example, aluminum inventories in China's main trading regions are estimated to have climbed to a record as supply growth outpaced demand in the largest user and producer of the metal.  Livestock also decreased, down 4.89%, led by Lean Hogs, as weak packing margins continued to weigh on the sector.  Agriculture declined 3.72% as crop-friendly weather in South America and the US Midwest improved harvest prospects for grains.  Expectations of higher global Corn supplies also weighed on the sector.  Energy ended the month lower, down 2.55%. WTI Crude Oil was the worst performing sector component, partly as a result of the Seaway pipeline operating at reduced flow rates due to the high inventory build-up at the Jones Creek terminal at the Gulf Coast end of the pipeline.

About the Credit Suisse Total Commodity Return Strategy

Credit Suisse's Total Commodity Return Strategy has been managed for 18 years and seeks to outperform the return of a commodities index, such as the Dow Jones–UBS 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 February 28th, 2013 the team managed approximately USD 11.3 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 is able to offer clients its expertise in the areas of private banking, investment banking and asset management from a single source. Credit Suisse provides specialist advisory services, comprehensive solutions and innovative products to companies, institutional clients and high net worth private clients worldwide, and also to retail clients in Switzerland. Credit Suisse is headquartered in Zurich and operates in over 50 countries worldwide. The group employs approximately 47,400 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.

Asset Management
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.

All businesses of Credit Suisse are subject to distinct regulatory requirements; certain products and services may not be available in all jurisdictions or to all client types.

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.

Copyright © 2013, CREDIT SUISSE GROUP AG and/or its affiliates.  All rights reserved.

SOURCE Credit Suisse AG



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