Commodity Market Declined Amid Continued Macroeconomic Uncertainty in December

Tue Jan 8, 2013 9:53am EST

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NEW YORK,  Jan. 8, 2013  /PRNewswire/ --  Commodities were lower in December as
continued uncertainty weighed on markets.

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Nelson Louie, Global Head of Commodities in Credit Suisse's Asset Management
business, said, "Commodities ended 2012 lower as a result of disappointing
growth momentum.  Although markets were largely focused on the looming US Fiscal
Cliff towards the end of the year, the US managed to avert economic calamity
with lawmakers approving a deal on  January 1, 2013.  Over the year ahead, the
rate of global growth will likely once again be the key to commodity
performance.  To that end, recent developments suggest that 2013 may be a better
year for the asset class. The recent evidence continues to suggest that global
growth may have troughed, with the possibility of a modest rebound over the
course of the new year."   

Christopher Burton, Senior Portfolio Manager for the Credit Suisse Total
Commodity Return Strategy, added, "Commodities could benefit from a rebound in
global growth along with continued low interest rates.  Inflation may overshoot
expectations if economic activity begins to pick up more robustly than expected.
 Commodities have historically tended to outperform during periods of higher
than expected inflation. Commodities may also continue to provide exposure to
'tail risk' events on the supply side, with the Energy and Agriculture sectors
remaining particularly vulnerable.  We believe investors will continue to derive
long-term diversification benefits that commodities provide."  

The Dow Jones-UBS Commodity Index Total Return was down by 2.61% in December. 
Overall, 12 out of 20 index constituents posted negative returns.  Agriculture
was the worst performing sector, down 4.46%.  Wheat and corn declined after the
USDA reported a slowdown in export demand.  In addition, soybeans and corn were
further pressured lower due to improved weather conditions in South America. 
Precious Metals declined, losing 3.81%, as a result of the looming fiscal cliff,
despite Chairman Bernanke's early-December announcement that the Federal Reserve
would be targeting lower unemployment before reigning in its extremely
accommodative monetary policies.  Energy decreased 1.95%, led lower by Natural
Gas as winter weather forecasts for the US remained relatively mild.  The
Industrial Metals sector ended the month slightly lower, down 0.74%, amid signs
of inventory builds in  China  and in London Metals Exchange warehouses. 
Livestock was relatively unchanged, up 0.45%.  However,  Russia  announced it
will require US exporters to certify that all pork and beef shipments are free
of a controversial feed additive, effectively banning US exports.  This move was
largely seen as political retaliation for a recently passed bill in the US
Senate.  

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  December 31, 2012  the team managed approximately  USD 11.2 billion  in
assets globally.   



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This 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
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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


Katherine Herring, Corporate Communications, +1-212-325-7545,
katherine.herring@credit-suisse.com
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