Commodity Market Stable Amid Continued Macroeconomic Uncertainty in November
NEW YORK, Dec. 12, 2012 /PRNewswire/ -- Commodities were relatively unchanged in November as continued macroeconomic uncertainty weighed on markets.
Nelson Louie, Global Head of Commodities in Credit Suisse's Asset Management business, said, "Market attention remained on US fiscal negotiations at the end of November. While a deal had yet to be made to avert the Fiscal Cliff, it was clear negotiations between the Republican-controlled House of Representatives and the President's office were active. What a final deal will look like and when it will be passed is still highly uncertain. Also, Eurozone leaders agreed to release the next tranche of aid to Greece in December, cooling imminent Greek concerns. However, worries over the outlook for Europe in general remain heightened and will likely to continue to feature in the headlines and market activity in the future. Meanwhile, there were continued signs of economic recovery reported during the month of November out of China and the US."
Christopher Burton, Senior Portfolio Manager for the Credit Suisse Total Commodity Return Strategy, added, "There are clearly signs of economic recovery while much uncertainty and potential headwinds remain. As a result, major central banks have generally continued to pursue their exceptionally loose monetary policies in an effort to provide ongoing support to nascent recoveries. Inflation may overshoot expectations if economic activity begins to pick up more robustly than expected or capital markets begin to react to negative real rates with capital outflows and currency depreciation. This scenario could be beneficial for those who use commodities as an inflation hedge."
The Dow Jones-UBS Commodity Index Total Return was up by 0.05% in November. Overall, 12 out of 20 index constituents posted positive returns. Industrial Metals was the best performing sector, up 6.99% for the month. China's manufacturing Purchasing Managers Index ("PMI") readings continued to suggest recovery and expansion, reversing the summer decline. Base metals were also supported by US October housing starts, reported at their highest level since 2008, being above expectations. Livestock increased 1.48%, led by Lean Hogs, as a result of unexpected gains in pork cutout prices during a time of typically sluggish demand. Hog futures tend to dip at the beginning of November on weakening seasonal demand, as consumers turn to turkey and other meat proteins near the holidays. Precious Metals was relatively unchanged, up 0.25%, as ongoing concerns over Greece and Europe, along with the Fiscal Cliff debate, contributed to heightened volatility in currencies and precious metals. Energy decreased 1.14%, led lower by Natural Gas. However, crude oil and petroleum products increased after a volatile month with market sentiment closely following the Gaza conflict and the subsequent ceasefire. Expectations that Greece would be able to avoid near-term bankruptcy brightened the outlook for oil demand from Europe. Agriculture decreased 2.81%. Soybeans remained under pressure following the release of the November USDA monthly World Agriculture Supply and Demand report. Grains were generally weaker amid increased expectations for global supply.
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 November 30, 2012 the team managed approximately USD 10.8 billion in assets globally.
Credit Suisse AG
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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.
Copyright © 2012, CREDIT SUISSE GROUP AG and/or its affiliates. All rights reserved.
SOURCE Credit Suisse AG
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