Nelson Louie, Global Head of Commodities in Credit Suisse’s Asset Management division, said, “Commodities performance was mixed in September, driven higher by base and precious metals. Both sectors benefitted from the additional quantitative easing measures announced in the US as well as stimulus measures implemented by central banks around the globe. The US continued to offer some positive signs – home prices have continued to recover strongly, while new home sales also continue to improve. Consumer confidence showed significant improvement with the University of Michigan Consumer Confidence Survey rising to its second highest level since January 2008. Car sales and other discretionary consumer goods spending also showed sustained improvement. However, the looming federal “fiscal cliff” will likely remain a drag on the US economy.”

Christopher Burton, Senior Portfolio Manager for the Credit Suisse Total Commodity Return Strategy, added, “In September, the Federal Reserve pledged to buy $40 billion in mortgage securities per month and keep the extension of Operation Twist in place until employment improves significantly. The Federal Reserve also extended its low interest rate guidance through to mid-2015. The Fed has effectively stated they will err on the side of removing support too late, rather than too early. Historically, tightening monetary policy after signs of inflation have emerged has coincided with higher than expected inflation. Amid this backdrop, we believe commodities are poised to serve investor portfolios well. We believe investors will continue to benefit from the diversification benefits commodities provide.”

The Dow Jones-UBS Commodity Index Total Return was up by 1.71% in September. Overall, 11 out of 20 index constituents posted positive returns. Industrial Metals was the best performing sector, up 11.03%, after Ben Bernanke unveiled the Fed’s new program, where they will buy $40 billion in mortgage backed securities per month and gave little insight as to the end of its quantitative easing program. The Yunnan provincial government in China also announced government intervention, declaring it would stockpile 200,000 tons of aluminum and 20,000 tons of copper, in addition to the aforementioned zinc. The stockpiling is an effort to keep smelters running in the province and support local economic performance as well as the incumbent tax revenues. Precious Metals increased 6.23% as both Gold and Silver gained on Central Bank pledges for further stimulus and market support efforts. Energy was higher, up 2.26%, led by Natural Gas. Gasoline increased, supported by tight existing inventory levels and reports of multiple refinery outages. Livestock decreased 2.04%, with Lean Hogs higher and Live Cattle lower. Lean Hog weights continued to be reported below last year’s levels. This was a reflection of lower quality corn being used as feed and pigs being brought to slaughter sooner due to the higher costs of feed. While this could ultimately lead to lower supplies, it has increased supply of pork in the near term. Agriculture declined 4.43%, led lower by Soybean Oil. Corn also fell, with its harvest 39% complete as of September 23rd, compared to 12% at the same time last year, as reported by the USDA. This detracted from some of the sharp gains posted over the summer amid expectations for tight supplies.

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 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 September 30, 2012 the team managed approximately USD 11.1 billion in assets globally.