NEW YORK, March 14, 2017 /PRNewswire/ -- Commodities
rose slightly in February due to higher inflation expectations and
macroeconomic headlines, according to Credit Suisse Asset
Management.
The Bloomberg Commodity Index Total Return performance was
positive for the month, with 13 out of 22 Index constituents
posting gains.
Credit Suisse Asset Management observed the following:
- Precious Metals increased 3.93%, with Gold and Silver rising
amid the possibility of higher inflation due to new US fiscal
policy, leading to increased demand for the sector as an inflation
hedge.
- Industrial Metals gained 2.24%, led higher by Nickel.
The Philippines continued to
tighten environmental standards as it cancelled contracts for
mining projects near watershed areas.
- Livestock was 1.26% higher, driven by Live Cattle. The US
Department of Agriculture reported beef exports were 30% higher in
December 2016 compared to the same
period the year prior.
- Agriculture eased 0.28%, led lower by Coffee. Coffee supply
expectations for Brazil's main
growing region improved as weather forecasts showed rains abating
at the start of the harvest season.
- Energy decreased 2.72%, driven lower by Natural Gas. Natural
Gas decreased as most of the US experienced abnormally warm
temperatures throughout the month, dampening heating demand amid
already ample inventory levels.
Nelson Louie, Global Head of
Commodities for Credit Suisse Asset Management, said: "Initial
compliance to the OPEC coordinated oil production cuts was high,
helping to tighten global supply and demand balances. However,
increasing US active rig counts grew US production to near 2016
levels. It is likely that OPEC will more frequently reassess the
effectiveness of its output cuts as it seeks to stabilize prices at
higher levels, yet remain cautious as its actions may bring about
additional supplies elsewhere. Uncertainty as to whether OPEC will
extend oil production cuts beyond June may derail plans by non-OPEC
producers. With lackluster demand due to abnormally warm weather
during the 2016/2017 winter heating season, the next catalyst for
Natural Gas prices is likely US summer weather, as the potential
for another El Niño event is steadily increasing. This event may
also have the potential to impact agricultural commodities for
future crop seasons."
Christopher Burton, Senior
Portfolio Manager for the Credit Suisse Total Commodity Return
Strategy, added: "From a macro perspective, the US Federal Reserve
is likely to raise short-term interest rates soon, as the US labor
market comes closer to full employment and as inflation continues
to rise near or above Fed targets. However, the path of subsequent
hikes and the future of fiscal policy remain unclear in the US.
Assuming fiscal expansion does materialize, economic growth
expectations may accelerate, which is likely to be inflationary in
an economy already near full employment and with prices increasing
at fairly normal levels. Consumer inflation and producer prices in
Europe continued to accelerate. In
Japan, inflation levels remained
weak but were positive in the latest reading for January.
Commodities have historically tended to outperform during periods
of higher-than-expected inflation and may serve as a good
diversifier within an investor's portfolio."
About the Credit Suisse Total Commodity Return
Strategy
Credit Suisse's Total Commodity Return Strategy is
managed by a team with over 30 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 February 28, 2017, the Team
managed approximately USD 8.8 billion
in assets globally.
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produced by and the opinions expressed are those of Credit Suisse
as of the date of writing and are subject to change. It has been
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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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SOURCE Credit Suisse AG