NEW YORK, March 12, 2018 /PRNewswire/
-- Commodities decreased in February on expectations of
increased US shale production and weakening demand for metals due
to a stronger US Dollar.
The Bloomberg Commodity Index Total Return performance was lower
for the month, with 13 out of 22 Index constituents posting
losses.
Credit Suisse Asset Management observed the following:
- Energy fell 7.15% as mild US temperatures reduced heating
demand for Natural Gas and on increased expectations that higher
crude oil prices may continue to incentivize US shale production,
impeding the progress of the global inventory rebalance.
- Precious Metals decreased 2.56% as the US Dollar strengthened
on news that the US Fed may implement faster-than-expected interest
rate hikes to contain rising inflation.
- Industrial Metals declined 2.17% as a stronger US Dollar made
base metals more expensive.
- Livestock fell 1.92%, led lower by Lean Hogs, after the USDA
reported a decline in US pork exports in December 2017 compared to the year prior,
potentially indicating softening demand.
- Agriculture increased 4.71%, led higher by Soybean Meal, as
Argentina faced its worst drought
in ten years, hurting soybean crop production expectations.
Nelson Louie, Global Head of
Commodities for Credit Suisse Asset Management, said: "Central
banks appear to be more cautiously optimistic with increasing
evidence of synchronized growth across major economies. US Federal
Reserve Chairman Powell provided bullish commentary regarding the
state of the US economy and confirmed that the Fed intends to
continue to gradually increase interest rates in 2018. However,
markets remain wary of faster-than-expected rate hikes if
inflationary pressures increase. Commodities have historically
outperformed during periods of higher-than-expected inflation.
Stronger-than-expected global oil demand along with high
compliance rates to the OPEC-led production cuts helped with the
global inventory rebalance, and this is expected to continue
throughout 2018. Risk still remains regarding the growth of US oil
production outperforming expectations. As global growth
accelerates, there are also rising prospects for further
infrastructure development and capital spending, particularly
within China and the US. This may
elevate demand for industrial metals, while supplies in this sector
remain tight due to government-mandated production restrictions in
Asia."
Christopher Burton, Senior
Portfolio Manager for the Credit Suisse Total Commodity Return
Strategy, added: "As central banks look to adjust monetary policy,
risks still remain globally. Fourth quarter UK GDP was revised
lower, causing it to lag the economic growth achieved by its peer
countries. China saw a
larger-than-expected fall in January manufacturing PMI activity as
well as softening export demand. Even within the US, new and
previously owned home sales reached new lows in January. Market
participants will closely keep watch of these situations to ensure
the timing of monetary tightening won't impede or stall the
progression of growth. Hence, the pace of tightening by the central
banks may not be fast enough, which may lead to more inflationary
pressures."
About the Credit Suisse Total Commodity Return
Strategy
Credit Suisse's Total Commodity Return Strategy is managed by a
team with over 32 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, 2018, the Team
managed approximately USD 8.9 billion
in assets globally.
Press Contact
Candice Sun, Corporate
Communications, +1 (212) 325-8226,
candice.sun@credit-suisse.com
Credit Suisse AG
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Certain risks relating to investing in Commodities and
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Investment in commodity markets may not be suitable for all
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