NEW YORK, Jan. 14, 2019 /PRNewswire/ -- Commodities
decreased as a lower global growth outlook reduced the demand
expectations for crude oil and base metals.
The Bloomberg Commodity Index Total Return decreased for the
month, with 19 out of 22 constituents posting losses.
Credit Suisse Asset Management observed the following:
- Energy declined 18.74%, led lower by Natural Gas, as
warmer-than-expected temperatures within the US reduced heating
demand amid seasonally low inventory levels.
- Industrial Metals decreased 5.12% as skepticism surrounding the
ability to timely renegotiate the terms of a new agreement between
the US and China remained by the
end of December, keeping demand expectations for base metals
low.
- Agriculture fell 2.39%, led down by Cotton, due to reduced
consumption forecasts from Asia,
strong production in China with
the help of government subsidies and low US export demand.
- Livestock eased 0.89%, led down by Lean Hogs, after the USDA
reported strong US hog production and higher-than-expected frozen
pork inventories.
- Precious Metals increased 5.75% as weakness in global equity
markets along with a partial US government shutdown increased safe
haven demand for Gold and Silver, along with the outlook for less
aggressive monetary tightening.
Nelson Louie, Global Head of
Commodities for Credit Suisse Asset Management, said: "After the
Group of 20 meeting in Argentina,
the US and China began a
three-month break from enacting additional tariffs and to resume
trade negotiations. If the two nations can make significant
compromises in the coming months, then this may be supportive of
global economic growth. 2019 may also bring new risks to crude oil
supplies. Nigeria and Libya will hold major elections this year and
the potential for civil unrest due to potential political
transitions may disrupt oil production as it has in the past.
In addition, output reductions from OPEC and its partners,
including a reduction of oil exports to the US may alter the
supply/demand balance. The market also awaits data to assess
compliance by those countries who received Iranian oil import
waivers from the US. If it is deemed that these countries failed to
adhere to the stipulations surrounding the sanctions, then the US
may further tighten restrictions around Iranian oil exports to
these countries."
Christopher Burton, Senior
Portfolio Manager for the Credit Suisse Total Commodity Return
Strategy, added: "As global growth expectations weakened over the
past few months, central banks may implement additional policy
measures in support of economic progression. Trade tensions with
the US have pressured China's
economy as its manufacturing activity contracted in December. In
response, the Chinese government intends to enact more fiscal
measures to support its housing and manufacturing industries. The
ECB announced it will maintain its key interest rate below 0% at
least through mid-2019 amid a slowing economy. And, the US Fed
seemed to suggest it will follow a slower pace of rate hikes in
2019 in light of uncertainty regarding future global growth.
However, US labor and wage data appear to remain strong. The
cautious actions exhibited by central banks as the global economy
shifts from monetary easing to a tightening cycle may be supportive
of global economic activity as well as commodity demand."
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 combined 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 December 31, 2018, the Team
managed approximately USD 7.6 billion
in assets globally.
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Credit Suisse
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