Christopher Burton, Co-Lead Portfolio Manager, added, "Other factors could also weigh on the market over the long-term, such as the proposed $1 trillion European Central Bank, Euro zone, and IMF combined support package. While the details of the proposal are not yet clear, such a large support package could ultimately result in inflation, which could ultimately benefit commodities. We don't believe such a scenario is priced into commodity prices at this time and recent price weakness may offer a favorable entry point for those considering adding to their existing commodity exposures, particularly with inflation expectations remaining relatively low in recent months."
The Dow Jones-UBS Commodity Index Total Return was down 6.92% in May, bringing the year-to-date performance to -9.89%. Among 19 index constituents, economically sensitive commodities, like the petroleum complex and base metals, were among the worst performers. Natural Gas was the strongest performer during the month, returning 7.20% as a result of increased demand, due to an early onset of the cooling season in parts of the U.S., forecasts for a heavy hurricane season and curbs on off-shore drilling. Gold continued its positive momentum, up 2.77% in May and 10.47% year-to-date, due in part to recent fluctuations in the currencies market. Nickel was the weakest commodity for the month, down 18.92% as economic uncertainty led to a pullback in expectations of growth oriented activity. Crude Oil was also down 16.28% in May, which resulted in negative year-to-date performance for the commodity.