NEW YORK, Nov. 14, 2018 /PRNewswire/ -- Commodities
decreased as demand expectations for industrial metals fell amid
softening global growth prospects and as supply expectations for
crude oil grew.
The Bloomberg Commodity Index Total Return was lower for the
month, with 15 out of 22 constituents posting losses.
Credit Suisse Asset Management observed the following:
- Industrial Metals declined 5.52% as the ongoing trade war
between the US and China reduced
industrial demand expectations as well as overall global growth
expectations.
- Energy decreased 5.51% as supply expectations for crude oil and
petroleum products increased out of Saudi
Arabia, Russia and the US,
while demand prospects worsened due to growing global macroeconomic
concerns.
- Livestock was 0.69% lower, led down by Live Cattle, after the
US Dollar strengthened versus other major world currencies, making
US beef less competitive in international markets.
- Precious Metals gained 0.77% as continued trade issues between
the US and China, and renewed
European fiscal and growth concerns, increased the safe haven
demand for Gold, more than offsetting weakness from a stronger US
Dollar.
- Agriculture rose 2.17%, led higher by Sugar and Coffee, as the
Brazilian Real strengthened versus the US Dollar, discouraging
local farmers from selling down their inventories priced in US
Dollars and subsequently reducing supply expectations.
Nelson Louie, Global Head of
Commodities for Credit Suisse Asset Management, said: "Buyers of
Iranian crude oil have already cut imports to avoid political or
economic consequences before sanctions on Iran resumed on November 5th. Sanctions compliance from
China and India, the two largest importers of crude oil
from Iran, will be important, with
China being one of the bigger
uncertainties given the ongoing trade dispute between it and
the United States. It is expected
that the US will allow some buyers to continue to import crude oil
and petroleum products from Iran,
but only if they show that they have cut imports from previous
levels. The cut threshold required for the US to provide the
waivers is a key unknown, with meaningful implications for how many
additional barrels are needed from other producers to meet global
demand. In addition, the outcome of the US midterm elections may
alter the US administration's stance against Saudi Arabia.
Lately, Saudi Arabia has been
cooperating with US interests by increasing its supply of crude
oil, potentially helping to keep prices from going higher."
Christopher Burton, Senior
Portfolio Manager for the Credit Suisse Total Commodity Return
Strategy, added: "During October, the International Monetary Fund
reduced its global growth forecast for this year and next, which
has reduced base metals demand expectations. An important driver of
base metal supplies may be the evolution of China's environmental policies, which last
winter successfully cut air pollution while reducing aluminum and
zinc production. It's expected that Chinese pollution policies this
winter will target producers with less environmentally friendly
processes to reduce production. In addition, the Chinese government
appears to be committed to supporting its housing and manufacturing
industries, which may be supportive of base metals demand, by
announcing additional economic stimulus measures after multiple
Chinese economic indicators showed weakness in recent months.
Meanwhile, the current strength of the US economy may be supportive
of cyclical commodities demand. In addition, wage growth continued
to put pressure on the US Federal Reserve to continue to raise
interest rates and finally normalize exceptionally loose monetary
policies. Risk remains that many major central banks are
behind in their tightening efforts, attempting to not impede
economic growth. This may increase the risk that inflation may
overshoot expectations, especially at this point in the economic
cycle."
About the Credit Suisse Total Commodity Return
Strategy
Credit Suisse's Total Commodity Return Strategy is
managed by a team with over 35 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, 2018, the Team
managed approximately USD 8.6 billion
in assets globally.
Press Contact
Candice
Sun, Corporate Communications, +1 (212) 325-8226,
candice.sun@credit-suisse.com
Credit Suisse
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