NEW YORK, Nov. 15, 2017 /PRNewswire/ -- Commodities
gained in October on strengthening demand for most sectors,
according to Credit Suisse Asset Management.
The Bloomberg Commodity Index Total Return performance was
positive for the month, with 14 out of 22 Index constituents
posting gains.
Credit Suisse Asset Management observed the following:
- Livestock gained 10.57%. Lean Hogs and Live Cattle were both
supported by strong domestic and export demand.
- Industrial Metals rose 5.83%, led higher by Nickel, due to
increased demand expectations for usage in electric car
batteries.
- Energy was 2.46% higher as crude oil and petroleum product
inventory levels continued to decline. US domestic crude oil
refining demand returned to above average seasonal levels, while
volumes of crude exports rose to new highs.
- Precious Metals decreased 0.71%, led lower by Gold. The US
Dollar strengthened in October as the US Senate passed the 2018
fiscal year budget, which may pave a gateway to potential tax
reform.
- Agriculture declined 0.92%, pressured lower by Wheat, after the
USDA reported larger-than-expected US production for the 2017 crop
year and increased its forecasts for a global surplus.
Nelson Louie, Global Head of
Commodities for Credit Suisse Asset Management, said: "Numerous
weather events have had significant economic impacts to various
countries so far this year. These shocks impacted key commodity
producing regions, and weather continues to have the potential to
significantly affect the supply fundamentals of energy and
agricultural commodities. Thus far, expectations are for a
relatively weak La Niña effect over the Pacific Ocean to occur
before year end. However, if that were to strengthen, it could
disrupt production for some crops while increasing natural gas
heating demand in other parts of the region. Despite multiple
hurricanes causing severe flooding and some infrastructure damage,
forcing some local economies to come to temporary standstills, US
third quarter GDP came in higher-than-expected at 3%. Consumer
confidence in the US economy rose in October, as the University of Michigan's Index of Consumer
Sentiment reached its highest level since 2004. In addition, the
unemployment rate fell to 4.2% in September. These positive
economic indicators continue to provide support for a probable rate
hike in December."
Christopher Burton, Senior
Portfolio Manager for the Credit Suisse Total Commodity Return
Strategy, added: "In Europe, tensions escalated between Catalonia's
regional government and the Spanish national government. However,
the Eurozone's economic recovery continued into the beginning of
the fourth quarter. After the European Central Bank's latest
meeting held late in October, ECB President Draghi announced that
it will begin to reduce the monthly bond purchasing amount by half
beginning in 2018, though he also stated he would continue the
program longer-than-expected, highlighting that the ECB will
continue to divert from US policy by remaining more dovish. This
divergence of global central bank policies creates additional
uncertainty and the potential to increase currency volatility.
However, even as the US and some other central banks begin to
tighten, they remain incredibly accommodative by historical
standards, while the world's major economies are growing in a
coordinated fashion. The potential for inflation risk remains,
highlighting the benefit of holding commodities as a valuable hedge
against unexpected inflation."
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 October 31, 2017, the Team
managed approximately USD 8.5 billion
in assets globally.
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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
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