Nelson Louie, Global Head of Commodities in Credit Suisse’s Asset Management division, said, “The end of May brought runs of economic indicators that were below market expectations. In the US, the latest crop of sluggish economic statistics may lead to further accommodative policy efforts from the Federal Reserve. With recent political changes in the Eurozone, it appears Germany may have to pay more attention to growth measures in addition to pushing for austerity. Likewise, key emerging markets may be in a position to once again employ stimulus measures due to relatively healthy fiscal balances. Brazil and India’s central banks cut interest rates and China and Russia rolled out fiscal stimulus measures.”

Christopher Burton, Senior Portfolio Manager for the Credit Suisse Total Commodity Return Strategy, added, “Further easing measures are likely to increase inflation expectations and the likelihood of inflation overshooting expectations. This may be especially true should economic activity be more robust than expected. Commodities have historically tended to outperform during periods of higher than expected inflation. The uncertainty surrounding the European resolution has impacted, and may continue to impact, traditional asset classes and commodities differently. We believe investors will continue to benefit from the long-term diversification benefits that commodities provide.”

The Dow Jones-UBS Commodity Index Total Return was down by 9.13% in May. Overall, 17 out of 20 index constituents decreased in value. Energy was the worst performing sector, down 11.12% for the month. Mounting macroeconomic concerns surrounding Greece and peripheral European economies weighed on demand expectations for the sector. Potential supply shocks remain possible with tensions in the Middle East remaining high. However, markets were focused on downside risk scenarios during the month. Agriculture decreased, down 9.89%, led lower by Cotton. China Customs agricultural trade data for April were mixed, with China’s Corn, Wheat and Cotton imports easing month-over-month while Coffee, Sugar, Soybeans and Soybean Oil imports were higher. China’s Corn imports fell sharply, while exports were up significantly, which meant China switched to being a net exporter in April for the first time since May 2011. Industrial Metals declined 9.65%. Copper dropped to its lowest levels since late last year, also weighed down by heightened global growth concerns, particularly regarding Europe and China. Precious Metals also declined, losing 7.13%, as concerns about Greece and the Eurozone continued to dominate market sentiment after a European Union summit on May 23rd yielded few practical steps to manage the debt crisis. Livestock increased 3.27% after the USDA reported cattle inventory below last year’s levels and below expectations. Lean Hogs continued to recover from previous declines, supported by strong export demand.


The Credit Suisse Total Commodity Return Strategy group periodically produces updates on relevant industry topics. For a copy of the team’s white paper, “Commodities Outlook: Increased Volatility, Increase Opportunity?” , please contact your Credit Suisse Relationship Manager.

About the Credit Suisse Total Commodity Return Strategy
Credit Suisse’s Total Commodity Return Strategy has been managed for 17 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 May 31, 2012 the team managed approximately USD 9.7 billion in assets globally.