September 11, 2019 - 10:00 AM EDT
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Commodities Declined on Protracted Trade Issues and Moderating Global Growth

NEW YORK, Sept. 11, 2019 /PRNewswire/ -- Continued trade issues and moderating global growth expectations weighed on the commodities asset class.

Credit Suisse logo. (PRNewsFoto/Credit Suisse)

The Bloomberg Commodity Index Total Return decreased for the month, with 19 of 23 constituents posting losses.

Credit Suisse Asset Management observed the following:

  • Livestock decreased 8.86% as escalating trade tensions between the US and China diminished the probability of higher US pork exports to China.
  • Energy declined 5.70% following a weaker demand outlook for crude oil and petroleum products amid softening economic indicators globally.
  • Agriculture fell 5.05%, led lower by Kansas City Wheat, as strong crop yield forecasts for Ukraine's 2019 wheat harvest increased global competition for US supply.
  • Industrial Metals was relatively flat, returning 0.51%. Nickel gained after the Indonesian government announced that the initial start of January 2022 for a ban on all nickel ore exports would be moved forward by two years.
  • Precious Metals increased 7.60% as new trade announcements between the US and China further strained relations, increasing safe haven demand for Gold and Silver.

Nelson Louie, Global Head of Commodities for Credit Suisse Asset Management, said: "The US-China trade war worsened mid-August with another bout of import taxes scheduled to take place in three waves between now and December. There is a possibility that the latter rounds may be scaled back or eliminated as both administrations indicated their intentions to meet in autumn to continue negotiations. The US administration also made symbolic statements towards negotiating in good faith at the recent Group of 7 Summit in France. Any meaningful move towards a resolution would likely impact commodity prices as exports of US agricultural goods may improve and industrial demand for base metals may rise. The potential for supply shocks in key commodity-producing regions such as the Middle East also remain despite some indications during the month that more diplomatic means of negotiation would return between the US and Iran."

Christopher Burton, Senior Portfolio Manager for the Credit Suisse Total Commodity Return Strategy, added: "The trade war appeared to finally impact the US economy, as second quarter GDP slowed in comparison to first quarter's reading and as the PMI August reading fell to slightly below 50 for the first time since 2009. As a global slowdown takes hold and central bankers prepare for a moderating pace of global growth, the focus has slightly shifted to what stage the markets are in within the current business cycle. Many central banks have committed to trying to stimulate growth through more rate cuts and stimulus measures. China revealed that it may allow local governments to issue new bonds to support infrastructure investments. Supportive monetary and fiscal measures from various countries around the world may help economies soften the negative impacts from the slowing of international trade and consequently spur 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 August 31, 2019, the Team managed approximately USD 6.5 billion in assets globally.

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Andre Rosenblatt, Corporate Communications, +1 (212) 325-8230, [email protected]

Credit Suisse AG
Credit Suisse AG is one of the world's leading financial services providers and is part of the Credit Suisse group of companies (referred to here as 'Credit Suisse'). Our strategy builds on Credit Suisse's core strengths: its position as a leading wealth manager, its specialist investment banking capabilities and its strong presence in our home market of Switzerland. We seek to follow a balanced approach to wealth management, aiming to capitalize on both the large pool of wealth within mature markets as well as the significant growth in wealth in Asia Pacific and other emerging markets, while also serving key developed markets with an emphasis on Switzerland. Credit Suisse employs approximately 46,360 people. The registered shares (CSGN) of Credit Suisse AG's parent company, Credit Suisse Group AG, are listed in Switzerland and, in the form of American Depositary Shares (CS), in New York. Further information about Credit Suisse can be found at www.credit-suisse.com.

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Certain information contained in this document constitutes "Forward-Looking Statements" (including observations about markets and industry and regulatory trends as of the original date of this document), which can be identified by the use of forward-looking terminology such as "may", "will", "should", "expect", "anticipate", "target", "project", "estimate", "intend", "continue" or "believe", or the negatives thereof or other variations thereon or comparable terminology. Due to various risks and uncertainties beyond our control, actual events, results or performance may differ materially from those reflected or contemplated in such forward-looking statements. Readers are cautioned not to place undue reliance on such statements. Credit Suisse has no obligation to update any of the forward-looking statements in this document.

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.

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SOURCE Credit Suisse AG


Source: PR Newswire (September 11, 2019 - 10:00 AM EDT)

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