Dec. 10, 2013
Commodities were lower in November due to uncertainty regarding the future of US stimulus measures.
, Global Head of Commodities in Credit Suisse's Asset Management business, said, "There is increasing optimism among some economists that global GDP will accelerate from a trough of 2.8% in the third quarter of 2013 to higher levels in 2014, driven by stronger than expected growth in the US and a continuing recovery in
. This is potentially the first significant acceleration in global growth in three years and may be supportive of global commodity demand. While key macroeconomic risks have recently diminished and the economic tide appears to have shifted, significant changes to expectations may negatively impact markets, including commodities."
, Senior Portfolio Manager for the Credit Suisse Total Commodity Return Strategy, added, "US Federal Reserve Chair nominee
has indicated she will tolerate higher than targeted levels of inflation in order to bring the unemployment rate down more rapidly. Outside of the US, monetary policy will also likely continue to be accomodative as policy makers may generally err on the side of caution and may be reluctant to tighten too quickly. In this context, the risk of inflation overshooting expectations is elevated. As commodities tend to outperform traditional asset classes in periods of higher than expected inflation, we would expect investors to benefit from a long-term core position within a diversified portfolio."
The Dow Jones-UBS Commodity Index Total Return decreased 0.80% in November. Overall, 14 out of 22 index constituents posted negative returns. Precious Metals was the worst performing sector, down 6.35%, amid uncertainty regarding the future of US stimulus measures. A Federal Reserve official said that asset purchases may be scaled back this year, despite assurances from
, likely the next chair of the Federal Reserve, that the US central bank would continue its accommodative monetary policy. Industrial Metals declined 4.80% as increased global supplies weighed on the sector. Livestock decreased 1.19%, led lower by Lean Hogs, due to heavier hog weights and expectations of increased pork supply. Agriculture was relatively unchanged, up 0.15%, due to mixed performance from sector components. While Soybeans and Soybean Meal increased, Wheat was pressured lower by slowing demand. In addition, the Environmental Protection Agency proposed a reduction in the overall biofuel mandate, potentially curbing demand for Corn, the main substance used to make ethanol in the US. Energy increased 2.28%, led by Natural Gas. Gasoline and Heating Oil were also top performers. The US Department of Energy reported a large draw in distillate inventories during the month, bringing inventory levels well below average levels for this time of year. Gasoline inventory levels also fell for the month. Meanwhile, WTI Crude Oil remained weak on rising stock levels, refinery maintenance, and rising US oil production.
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