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Press release from PR Newswire

Commodity Market Increased in July Amid Improved Economic Indicators

Thursday, August 08, 2013

Commodity Market Increased in July Amid Improved Economic Indicators

09:15 EDT Thursday, August 08, 2013

NEW YORK, Aug. 8, 2013 /PRNewswire/ -- Commodities were higher in July as fundamentals improved for some commodities, supported by positive macroeconomic data.

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Nelson Louie, Global Head of Commodities in Credit Suisse's Asset Management business, said, "Based on the July Purchasing Managers Index reports, global growth momentum may expand a bit faster in the second half of the year than the first.  China may be able to maintain a reasonable pace of growth in the near term, supported by improving external demand, still resilient domestic consumption, a steadily expanding service sector, and incremental growth-friendly policy initiatives. However, caution remains as the Chinese government has been reticent to provide further stimulus measures due to concerns over inflation.  While China's growth rates are still the envy of many other nations, they are significantly lower than the elevated rates markets had grown accustomed to.  The period of adjustment will likely continue."

Christopher Burton, Senior Portfolio Manager for the Credit Suisse Total Commodity Return Strategy, added, "The US economy continues to improve, though at levels not emphatic enough to ensure Federal Reserve tightening.  The Federal Reserve continues to express desire to tighten its extraordinarily loose monetary policy, yet is reluctant to do so too early and risk derailing the recovery.  Interest rates continued to rise throughout the month in anticipation of eventual policy changes and improving economic conditions.  As a result, the Federal Reserve and markets in general do not currently seem concerned with inflation.  This may increase the risk of inflation overshooting expectations should the Federal Reserve tighten its policies too slowly, especially should economic growth materialize stronger than is currently expected." 

The Dow Jones-UBS Commodity Index Total Return increased 1.36% in July.  Overall, 13 out of 22 index constituents posted positive returns.  Precious Metals increased the most, up 5.61%, supported by a weaker US dollar and expectations the Federal Reserve may take further actions to assure markets monetary policy will continue to be exceptionally loose.  Energy gained 4.22%, led by Gasoline and Crude Oil, on the back of strong US economic data and continued draws of US inventories.  Industrial Metals ended the month 0.92% higher as US signals on keeping monetary policy looser for longer eclipsed worries over growth in China towards the beginning of the month.  Livestock decreased 1.62%, led by Lean Hogs.  Asian buyers, including those in China, have become more active in the US market despite strict rules on using feed additives for pork going to China.  Some US packers have adjusted by increasing the number of hogs that are not fed ractopamine, thus making them eligible for export to Asia.  Agriculture declined 2.97%. The USDA reported improved crop conditions for US corn and soybeans, aided by warmer weather. 

About the Credit Suisse Total Commodity Return StrategyCredit Suisse's Total Commodity Return Strategy has been managed for 18 years and seeks to outperform the return of a commodities index, such as the Dow Jones?UBS 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 July 31st, 2013 the team managed approximately USD 10.9 billion in assets globally. 

Credit Suisse AGCredit Suisse AG is one of the world's leading financial services providers and is part of the Credit Suisse group of companies (referred to here as 'Credit Suisse'). As an integrated bank, Credit Suisse is able to offer clients its expertise in the areas of private banking, investment banking and asset management from a single source. Credit Suisse provides specialist advisory services, comprehensive solutions and innovative products to companies, institutional clients and high net worth private clients worldwide, and also to retail clients in Switzerland. Credit Suisse is headquartered in Zurich and operates in over 50 countries worldwide. The group employs approximately 46,300 people. The registered shares (CSGN) of Credit Suisse's parent company, Credit Suisse Group AG, are listed in Switzerland and, in the form of American Depositary Shares (CS), in New York. Further information about Credit Suisse can be found at www.credit-suisse.com.

Asset ManagementIn its Asset Management business, Credit Suisse offers products across a broad spectrum of investment classes, including hedge funds, credit, index, real estate, commodities and private equity products, as well as multi-asset class solutions, which include equities and fixed income products. Credit Suisse's Asset Management business manages portfolios, mutual funds and other investment vehicles for a broad spectrum of clients ranging from governments, institutions and corporations to private individuals. With offices focused on asset management in 19 countries, Credit Suisse's Asset Management business is operated as a globally integrated network to deliver the bank's best investment ideas and capabilities to clients around the world.

All businesses of Credit Suisse are subject to distinct regulatory requirements; certain products and services may not be available in all jurisdictions or to all client types.

Important Legal InformationThis document was produced by and the opinions expressed are those of Credit Suisse as of the date of writing and are subject to change without obligation to update. It has been prepared solely for information purposes and for the use of the recipient. It does not constitute an offer or an invitation by or on behalf of Credit Suisse to any person to buy or sell any security. Any reference to past performance is not a guide to future performance. The information and analysis contained in this publication have been compiled or arrived at from sources believed to be reliable but Credit Suisse does not make any representation as to their accuracy or completeness and does not accept liability for any loss arising from the use hereof.

Certain information contained in this document constitutes "Forward-Looking Statements" (including observations about markets and industry and regulatory trends as of the original date of this document), which can be identified by the use of forward-looking terminology such as "may", "will", "should", "expect", "anticipate", "target", "project", "estimate", "intend", "continue" or "believe", or the negatives thereof or other variations thereon or comparable terminology. Due to various risks and uncertainties beyond our control, actual events, results or performance may differ materially from those reflected or contemplated in such forward-looking statements. Readers are cautioned not to place undue reliance on such statements. Credit Suisse has no obligation to update any of the forward-looking statements in this document.

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.

Copyright © 2013, CREDIT SUISSE GROUP AG and/or its affiliates.  All rights reserved.

 

SOURCE Credit Suisse AG

For further information: Katherine Herring, Corporate Communications, tel. 212 325 7545, katherine.herring@credit-suisse.com

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