Commodity Markets Finished Modestly Higher in January; Investors Continue to Find Physical Assets Appealing Over the Long Term Horizon

NEW YORK, Feb. 9, 2011 /PRNewswire/ -- Commodity markets were modestly higher in January as physical asset prices reacted to higher than anticipated inflation in China and other developing countries.  Supportive fundamentals, combined with an improving macroeconomic landscape, may continue to support appreciating commodities prices.  

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Nelson Louie, Global Head of Commodities at Credit Suisse Asset Management said, "Developed and emerging countries are handling monetary policy much differently, which may instigate higher-than-expected inflation over time.  In the U.S., the Federal Reserve continues to favor a loose monetary policy in an effort to stoke economic growth and job creation, while in China, Central Bank officials raised bank reserve requirements once again in an attempt to curb inflation and keep economic growth from becoming destabilizing.  Through the actions of central bankers around the world, inflation, which has been running high in China and other emerging economies, may eventually surface in developed countries as well."

Christopher Burton, Senior Portfolio Manager for the Credit Suisse Total Commodity Return Strategy added, "The current global macroeconomic conditions also generally support commodity price levels.  Investor confidence in the Euro zone increased following successful bond auctions and support from key nations outside of Europe, while political uncertainty in Egypt and the Middle East rapidly escalated, driving commodity prices higher as January concluded.  Improving investor sentiment in developed regions coupled with geopolitical unrest in some emerging markets may provide a favorable backdrop for commodities performance."

The Dow Jones-UBS Commodity Index Total Return rose 1.00% in January. Overall, 13 of the 19 index constituents increased in value.  The Precious Metals sector, 2010's best performing sector, was the only sector to fall in January, decreasing 7.12%.  Gold and Silver prices declined as the demand for precious metals fell amidst renewed economic growth prospects and a decrease in risk aversion.  Agriculture continued its positive performance in January, rising 3.93%, as each commodity in the sector barring Soybean Oil posted monthly gains.  The sector has generally been supported by tight inventory levels due to continued strong demand and various supply shocks in key producing markets.

The Credit Suisse Total Commodity Return Strategy group periodically produces updates on relevant industry topics. For a copy of their white paper, "How Commodities Can Help Investors Face the Uncertainty of the Inflation/Deflation Debate", please email [email protected].

About the Credit Suisse Total Commodity Return Strategy

Credit Suisse's Total Commodity Return Strategy has been managed for fourteen 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 a quantitative 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 December 31, 2010 the team managed approximately USD 8.1 billion in assets globally.  

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