Lookout Report: Commodities Fare Well Amid Turmoil

Biweekly Research Note from S&P Valuation and Risk Strategies Delivers Institutional Market View of Fundamentals, Fixed-Income, Equities, Derivatives and Capital Markets

Sep 09, 2011, 16:32 ET from Standard & Poor's

NEW YORK, Sept. 9, 2011 /PRNewswire/ -- S&P Valuation and Risk Strategies today announced the release of its Lookout Report for September 9, 2011 featuring market insights on corporate earnings, leveraged loan trends, commodity index activity and more. The report, which is a biweekly research note that draws upon S&P's unique analytics assets – Capital IQ, S&P Indices, S&P Leveraged Commentary and Data, S&P Equity Research and S&P Valuation and Risk Strategies Research – is available here.

Among the articles in this week's report is a study by S&P index analysts which concludes that despite increasing global financial turmoil and volatility, commodities are generally expected to fare well, as emerging market demand remains intact, and the diversification benefits of real physical assets continues to gain support. Precious metals remained the best performing S&P GSCI sector in 2011 but were little changed on the month, consolidating previous gains, as measured by the third-quarter increase of 20.6% in the S&P GSCI Precious Metals Index.

Following are additional highlights in the September 9, 2011 edition of the Lookout Report:

Economic And Market Outlook: Earnings In North America And Europe

In North America, many investors remain concerned about the persistent drop in third-quarter S&P 500 earnings expectations. Although estimates typically decrease in the weeks leading up to earnings season, the recent declines seem to have come a bit earlier than normal for the third quarter. In Europe, analysts have significantly lowered aggregate expectations on economic growth concerns, leading to the lowered consensus.

Leveraged Commentary And Data: Leveraged Loans Lost 4.4% in August; The Year-to-Date Index Loss Is Now 1.77%

Managers attribute the widespread nature of the August correction to the sudden and severe change in the market's supply/demand equation. In fact, the market suffered its largest technical deficit since October, at $7.7 billion, as S&P/LSTA Index loans outstanding grew by $2.2 billion, even as net inflows into traditional accounts (prime-fund inflows and CLO issuance) slumped to negative $5.5 billion.

R2P Corporate Bond Monitor

As a result of sagging economic data in the U.S. and continued debt fears in the eurozone, investors' risk appetites remained low in August. Concurrently, corporate bonds' risk-reward profiles--as measured by average Risk-to-Price (R2P) scores--deteriorated sharply across the board, from July 29, 2011, to Sept. 2, 2011, continuing the July trend.

S&P Index Municipal Commentary: Are Municipal Bonds Still Cheap?

Demand for high-quality municipal bonds increased recently, as volatility in the equity markets, low default rates, and unique diversification characteristics have made the municipal bond asset class a flight-to-quality destination.

Capital Market Commentary: The Equity Market Forced Firms To Cancel IPOs In August

Equity market performance remained tumultuous in August, as the S&P 500 Index lost 5.7% in value. In the same period, many firms cancelled their planned initial public offerings (IPOs) due to market conditions. According to data retrieved from Capital IQ, companies withdrew 13 IPOs, marking the most for cancellations since December 2008, when firms pulled 22 IPOs off the market calendar.

The Lookout Report provides cross-market and cross-asset class views of current data and forward-looking insights from leading S&P market specialists.  Key areas of focus include aggregated corporate earnings, market and credit risk evaluation, capital markets activity, index investing and proprietary data and analytics.  The report previews the issues most likely to drive market expectations or cause a market disturbance in the weeks ahead.   It can be accessed on S&P.com, the S&P Global Credit Portal and Capital IQ.

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Media Contact: Michael Privitera Standard & Poor’s Communications 212-438-6679 michael_privitera@standardandpoors.com

SOURCE Standard & Poor's