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Commodity Market Increased Slightly in March Amid Mixed Macroeconomic Indicators
Nelson Louie, Global Head of Commodities in Credit Suisse’s Asset Management business, said, “The market’s focus has been on risks stemming from Europe along with emerging market demand concerns. The US equity market has largely bucked these concerns and continued to move higher, choosing to focus on encouraging domestic signs. US consumer confidence continued to recover, with the March reading near its highest level since 2007. The housing recovery continued to gain steam, with home prices higher for much of the country. However, commodities have been more sanguine, keeping with the broader global theme of higher risk aversion based on macroeconomic concerns.”
Christopher Burton, Senior Portfolio Manager for the Credit Suisse Total Commodity Return Strategy, added, “Events in the Eurozone as well as fluctuations in global growth expectations will continue to play a role in commodity market movements. However, we remain concerned with the long-term implications of ongoing monetary stimulus and its potential impact on unexpected inflation risk.”
The Dow Jones-UBS Commodity Index Total Return increased 0.67% in March. Overall, 10 out of 22 index constituents posted positive returns. Energy was the best performing sector, up 6.29%, led by Natural Gas on the back of continued larger-than-consensus storage withdrawals. Weather forecasts remained colder than normal, supporting heating demand. Precious Metals increased 0.63%. The uncertainty of Cyprus solidifying a bailout deal with the European Central Bank led investors to look to Gold as a safe haven, though it also led to a higher US dollar. Industrial Metals was the worst performing sector, down 4.53%, as events in Europe set the tone for base metals over the course of the month. Caution emerged over a possible bank run in Cyprus which weighed on the sector, as did speculation over weaker Chinese demand. Agriculture decreased 2.43% following the release of the USDA Grain Stocks report on March 28th, which featured inventories at or above the high end of consensus expectations for corn, soybeans and wheat. Livestock was relatively unchanged, down 0.31%, due to mixed returns from sector components. Live Cattle declined due to lower export expectations after Russia implemented a ban on US beef exports. Corn trading limit down at the end of the month also aided Live Cattle, as cheaper corn may reduce the near term supply of cattle.
About the Credit Suisse Total Commodity Return Strategy
Credit 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 March 31st, 2013 the team managed approximately USD 11.3 billion in assets globally.