Etikett: Greece

Risk Off to Risk On

ETFS Multi-Asset Weekly - Risk Off to Risk OnRisk Off to Risk On

ETFS Multi-Asset Weekly – Risk Off to Risk On

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Highlights

Historic accord on Iran deal paves way for lower oil prices.

Positive Chinese data, Q2 earnings and central bank meetings help fuel equity rally.

Declining commodity currencies underscore growth path divergence within major developed economies.

With Greece’s survival in the EU extended, and Greek banks partially opening today cyclical assets rallied. However, banking restrictions remain after being shut for three weeks and the ECB has injected €900m worth of fresh liquidity taking the country’s emergency liquidity assistance to €89.9bn. With Grexit fears easing and the US ready to raise rates later this year, gold has fallen out of favour and its price fell sharply today. However we believe that rate rises will be gradual and are more than priced-in to gold already and we are clearly not out of the woods on the Greek saga.

Commodities

Historic accord on Iran deal paves way for lower oil prices. The landmark deal of the six world powers with Iran to ease nearly a decade of sanctions in exchange for restricted nuclear enrichment activity is expected to apply further downward pressure to the price of oil. The International Energy Agency has said that Iran has at least 17m barrels of crude oil stored at sea ready to be shipped to an already oversupplied global market. In addition Saudi Arabia reported its crude oil production hit a record 10.6m barrels a day in OPEC’s latest monthly oil report. Meanwhile, US Crude stockpiles remain almost 100m barrels above the five-year average for this time of the year according to U.S. Energy Information Administration. We believe that after an initial correction, high cost oil producers will cut back on production paving the way for price increases in the future.

Equities

Positive Chinese data, Q2 earnings and central bank meetings help fuel equity rally. China dominated the data landscape with better-than-expected annual GDP (7% vs consensus expectations of 6.8%), industrial production (6.8% vs 6%) and retail sales (10.6% vs 10.2%) figures. Although viewed with skepticism, the releases helped reverse some of the losses on major global equity bourses. The Q2 earnings season added further momentum as 60% and 70% of the companies that reported earnings so far beat estimates in Europe and US, respectively. Central bank comments in the US and UK echoed the possibility for a rate rise on the back of improving economic data. While in Europe ECB president Draghi confirmed the asset purchase program was proceeding smoothly and helped allay investor concerns over Greece’s exit.

Currencies

Declining commodity currencies underscore growth path divergence within major developed economies. The Canadian dollar declined nearly 2.5 per cent against its US counterpart on the back of rate cut by the Bank of Canada and downward revisions in its growth forecasts. The Pound advanced to its highest level against the Euro since 2008 although there was no change in policy underlined in this week’s Bank of England monetary policy meeting except the Bank of England governor Mark Carney’s warning of a possible rate rise to reflect economic momentum. Looking ahead weaker dairy prices and lower CPI reading in June lead us to expect a rate cut by the Reserve Bank of New Zealand by 25bps to 3.00% this week. Antipodean currencies, AUD &NZD, are likely to remain under pressure as long as negative sentiment pervades the outlook for China.

For more information contact:

ETF Securities Research team
ETF Securities (UK) Limited
T +44 (0) 207 448 4336
E  info@etfsecurities.com

Important Information

General

This communication has been issued and approved for the purpose of section 21 of the Financial Services and Markets Act 2000 by ETF Securities (UK) Limited (”ETFS UK”) which is authorised and regulated by the United Kingdom Financial Conduct Authority (”FCA”).

Investments may go up or down in value and you may lose some or all of the amount invested.  Past performance is not necessarily a guide to future performance. You should consult an independent investment adviser prior to making any investment in order to determine its suitability to your circumstances.

The information contained in this communication is for your general information only and is neither an offer for sale nor a solicitation of an offer to buy securities. This communication should not be used as the basis for any investment decision. Historical performance is not an indication of future performance and any investments may go down in value.

This communication may contain independent market commentary prepared by ETFS UK based on publicly available information. Although ETFS UK endeavours to ensure the accuracy of the content in this communication, ETFS UK does not warrant or guarantee its accuracy or correctness. Any third party data providers used to source the information in this communication make no warranties or representation of any kind relating to such data. Where ETFS UK has expressed its own opinions related to product or market activity, these views may change. Neither ETFS UK, nor any affiliate, nor any of their respective, officers, directors, partners, or employees accepts any liability whatsoever for any direct or consequential loss arising from any use of this publication or its contents.

ETFS UK is required by the FSA to clarify that it is not acting for you in any way in relation to the investment or investment activity to which this communication relates. In particular, ETFS UK will not provide any investment services to you and or advise you on the merits of, or make any recommendation to you in relation to, the terms of any transaction.  No representative of ETFS UK is authorised to behave in any way which would lead you to believe otherwise. ETFS UK is not, therefore, responsible for providing you with the protections afforded to its clients and you should seek your own independent legal, investment and tax or other advice as you see fit.

This document is not, and under no circumstances is to be construed as, an advertisement or any other step in furtherance of a public offering of shares or securities in the United States or any province or territory thereof. Neither this document nor any copy hereof should be taken, transmitted or distributed (directly or indirectly) into the United States.

Other than as set out above, investors may contact ETFS UK at +44 (0)20 7448 4330 or at retail@etfsecurities.com to obtain copies of prospectuses and related regulatory documentation, including annual reports. Other than as separately indicated, this communication is being made on a ”private placement” basis and is intended solely for the professional / institutional recipient to which it is delivered.

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Securities issued by each of the Issuers are direct, limited recourse obligations of the relevant Issuer alone and are not obligations of or guaranteed by any of UBS AG, Merrill Lynch Commodities Inc. (”MLCI”), Bank of America Corporation (”BAC) or any of their affiliates. UBS AG, MLCI and BAC, Shell Trading Switzerland, Shell Treasury, HSBC Bank USA N.A., JP Morgan Chase Bank, N.A., Deutsche Bank AG any of their affiliates or anyone else or any of their affiliates. Each of UBS AG, Merrill Lynch Commodities Inc. (”MLCI”), Bank of America Corporation (”BAC) or any of their affiliates. UBS AG, MLCI and BAC, Shell Trading Switzerland, Shell Treasury, HSBC Bank USA N.A., JP Morgan Chase Bank, N.A. and Deutsche Bank AG disclaims all and any liability whether arising in tort, contract or otherwise (save as referred to above) which it might have in respect of this document or its contents otherwise arising in connection herewith.

”Dow Jones,” ”UBS”, DJ-UBS CISM,”, ”DJ-UBS CI-F3SM,” and any related indices or sub-indices are service marks of Dow Jones Trademark Holdings LLC (”Dow Jones”), CME Group Index Services LLC (”CME Indexes”), UBS AG (”UBS”) or UBS Securities LLC (”UBS Securities”), as the case may be, and have been licensed for use by the Issuer. The securities issued by CSL although based on components of the Dow Jones UBS Commodity Index 3 month ForwardSM are not sponsored, endorsed, sold or promoted by Dow Jones, CME Indexes, UBS, UBS Securities or any of their respective subsidiaries or affiliates, and none of Dow Jones, CME Indexes, UBS, UBS Securities, or any of their respective subsidiaries or affiliates, makes any representation regarding the advisability of investing in such product.

Sentiment overshadows fundamentals … for now

Sentiment overshadows fundamentals… for now

Commodity Monthly Monitor – Sentiment overshadows fundamentals … for now
June/July 2015

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Highlights

Currency impact overshadows stronger El Niño threat for softs.

Gold stable as tighter US policy overshadows Greece concerns.

Softer Chinese economic sentiment weighs on industrial metals

Energy sector buoyant as demand strengthens.

Outside the energy sector, investor sentiment for commodities has softened on the back of concern over the global economic outlook and the volatility that has pervaded financial markets. Volatility has been a ubiquitous force not only across asset classes, but across regions, as uncertainty over the health of the Chinese economy has lingered at the same time as fears of a Grexit has risen. Although policymakers have warned investors to expect protracted market volatility, stimulus in China, Japan, Europe and beyond is likely to keep demand conditions favourable for most commodities. With improving commodity fundamentals beginning to reassert, we expect that sentiment will rebound in coming months as stronger evidence of the global recovery begins to be witnessed.

Currency impact overshadows stronger El Niño threat for softs. Sharp moves in sugar have largely been currency related, offsetting any concern over reduced supply if the El Niño intensifies later in the year. Meanwhile good US growing conditions have kept any gains in check for grains.

Gold stable as tighter US policy overshadows Greece concerns. Gold outperformed other precious metals, remaining resilient despite the threat of rising US rates. Other metals in the sector were adversely impacted by evidence of softer demand.

Softer Chinese economic sentiment weighs on industrial metals. Despite broadly tighter fundamental conditions, deteriorating Chinese economic sentiment weighed on the industrial metals complex. We expect recovery in prices, as supply optimism begins to fade in the latter stages of 2015.

Energy sector buoyant as demand strengthens. Investors have cut bets of a near-term upside move in oil prices, despite rising demand. With oil supply remaining elevated on a global scale, the risk of a downside move in crude prices will increase if demand growth fades.

For more information contact:

ETF Securities Research team
ETF Securities (UK) Limited
T +44 (0) 207 448 4336
E  info@etfsecurities.com

Important Information

General

This communication has been issued and approved for the purpose of section 21 of the Financial Services and Markets Act 2000 by ETF Securities (UK) Limited (”ETFS UK”) which is authorised and regulated by the United Kingdom Financial Conduct Authority (”FCA”).

Investments may go up or down in value and you may lose some or all of the amount invested.  Past performance is not necessarily a guide to future performance. You should consult an independent investment adviser prior to making any investment in order to determine its suitability to your circumstances.

The information contained in this communication is for your general information only and is neither an offer for sale nor a solicitation of an offer to buy securities. This communication should not be used as the basis for any investment decision. Historical performance is not an indication of future performance and any investments may go down in value.

This communication may contain independent market commentary prepared by ETFS UK based on publicly available information. Although ETFS UK endeavours to ensure the accuracy of the content in this communication, ETFS UK does not warrant or guarantee its accuracy or correctness. Any third party data providers used to source the information in this communication make no warranties or representation of any kind relating to such data. Where ETFS UK has expressed its own opinions related to product or market activity, these views may change. Neither ETFS UK, nor any affiliate, nor any of their respective, officers, directors, partners, or employees accepts any liability whatsoever for any direct or consequential loss arising from any use of this publication or its contents.

ETFS UK is required by the FSA to clarify that it is not acting for you in any way in relation to the investment or investment activity to which this communication relates. In particular, ETFS UK will not provide any investment services to you and or advise you on the merits of, or make any recommendation to you in relation to, the terms of any transaction.  No representative of ETFS UK is authorised to behave in any way which would lead you to believe otherwise. ETFS UK is not, therefore, responsible for providing you with the protections afforded to its clients and you should seek your own independent legal, investment and tax or other advice as you see fit.

This document is not, and under no circumstances is to be construed as, an advertisement or any other step in furtherance of a public offering of shares or securities in the United States or any province or territory thereof. Neither this document nor any copy hereof should be taken, transmitted or distributed (directly or indirectly) into the United States.

Other than as set out above, investors may contact ETFS UK at +44 (0)20 7448 4330 or at retail@etfsecurities.com to obtain copies of prospectuses and related regulatory documentation, including annual reports. Other than as separately indicated, this communication is being made on a ”private placement” basis and is intended solely for the professional / institutional recipient to which it is delivered.

Third Parties

Securities issued by each of the Issuers are direct, limited recourse obligations of the relevant Issuer alone and are not obligations of or guaranteed by any of UBS AG, Merrill Lynch Commodities Inc. (”MLCI”), Bank of America Corporation (”BAC) or any of their affiliates. UBS AG, MLCI and BAC, Shell Trading Switzerland, Shell Treasury, HSBC Bank USA N.A., JP Morgan Chase Bank, N.A., Deutsche Bank AG any of their affiliates or anyone else or any of their affiliates. Each of UBS AG, Merrill Lynch Commodities Inc. (”MLCI”), Bank of America Corporation (”BAC) or any of their affiliates. UBS AG, MLCI and BAC, Shell Trading Switzerland, Shell Treasury, HSBC Bank USA N.A., JP Morgan Chase Bank, N.A. and Deutsche Bank AG disclaims all and any liability whether arising in tort, contract or otherwise (save as referred to above) which it might have in respect of this document or its contents otherwise arising in connection herewith.

”Dow Jones,” ”UBS”, DJ-UBS CISM,”, ”DJ-UBS CI-F3SM,” and any related indices or sub-indices are service marks of Dow Jones Trademark Holdings LLC (”Dow Jones”), CME Group Index Services LLC (”CME Indexes”), UBS AG (”UBS”) or UBS Securities LLC (”UBS Securities”), as the case may be, and have been licensed for use by the Issuer. The securities issued by CSL although based on components of the Dow Jones UBS Commodity Index 3 month ForwardSM are not sponsored, endorsed, sold or promoted by Dow Jones, CME Indexes, UBS, UBS Securities or any of their respective subsidiaries or affiliates, and none of Dow Jones, CME Indexes, UBS, UBS Securities, or any of their respective subsidiaries or affiliates, makes any representation regarding the advisability of investing in such product.

Agricultural Commodities Rally

Agricultural Commodities Rally

Agricultural Commodities Rally – ETF Securities Commodity ETP Weekly

•    Inflows into long oil ETPs highest in 14 weeks, as investors return to bargain hunting.

•    Profit-taking led to US$36.0mn outflows from long wheat ETPs.

•    Long nickel ETPs see largest inflows since November 2014 on the back of bargain hunting.

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The ‘No’ campaign in the Greece’s referendum yesterday received more than 60% of votes, emboldening the Greek government’s stance to reject its creditors terms. Failure to make progress in debt negotiations elevates the risk of a default on the €3.5bn that is owed to the ECB on 20th July. A default on that bond would almost certainly lead to the emergency liquidity assistance (ELA) being switched off and throw Greek banks into an untenable position. Gold has surprisingly not reacted to the events but that could change as worst-case scenarios crystalize. Agricultural commodities have clearly been outperformers in the past week. As the strengthening El Niño weather pattern changes crop growing conditions, we believe agricultural commodities will continue to offer investors strong opportunities.

Inflows into long oil ETPs highest in 14 weeks, as investors return to bargain hunting. A rise in rig counts in the US, the first since December 2014, drove WTI crude oil prices down 4.8%. Brent fell by 1.8%. As we have long argued, the rally in oil prices since March has been premature and has the potential to delay the supply cuts the industry needs. The increase in oil rigs is a confirmation that that incentive to cut production has waned. The necessary price decline should see that production is indeed pared back over the coming months. The potential lifting of sanctions against Iran should also weigh on oil prices in the near term. While a July 1st nuclear deal deadline passed with no agreement, a new deadline of 7th July has been set and talks are continuing. We expect high cost conventional oil producers to suffer the greatest loss in market share when prices fall, setting the scene for the nimble US shale oil industry to rebuild in due course. ETF securities long oil ETPs received US$49.3mn of inflows last week.

Profit-taking led to US$36.0mn outflows from long wheat ETPs. Wheat rallied close to 18% in 4 days, before paring gains to 10.1% for the week. A USDA report confirmed that wheat acreage planted this year will be lower than last year. The market took this very positively, although gains were pared once it was acknowledged that planting intentions (survey of farmers in March) had actually called for deeper cuts to growing. The profit-taking led to the largest weekly outflows in wheat ETPs since their inception in 2006. We believe that the strengthening El Niño weather pattern threatens to reduce global wheat production this year and opens further opportunities for investors to go long. El Niño tends to make the Asian sub-continent around India and Australia more dry than usual, which would crimp supplies from the large producing countries. Although the monsoon in India had gotten off to a brisk start in June, last week rain had slowed to below normal levels, the typical hallmark of the El Niño suppressing the monsoon.

Long nickel ETPs see largest inflows since November 2014 on the back of bargain hunting. Nickel fell 3.9% last week to a six-year low, mainly driven by technicals after the nickel breached the $12,000 psychological threshold. We believe that fundamentals will reassert. Declining nickel pig iron production in China, stronger demand from the European stainless steel market and reduced nickel ore availability will be key catalysts. Long nickel ETPs saw US$8.8mn inflows.

Key events to watch this week. Investors will continue to be distracted by the events unfolding in Greece after the ‘No’ vote in the referendum yesterday. The Australian Bureau of Meteorology will provide an El Niño update tomorrow.

Video Presentation

Nitesh Shah, Research Analyst at ETF Securities provides an analysis of last week’s performance, flow and trading activity in commodity exchange traded products and a look at the week ahead.

For more information contact

ETF Securities Research team
ETF Securities (UK) Limited
T +44 (0) 207 448 4336
E info@etfsecurities.com

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This communication has been provided by ETF Securities (UK) Limited (”ETFS UK”) which is authorised and regulated by the United Kingdom Financial Conduct Authority.

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This document may contain independent market commentary prepared by ETFS UK based on publicly available information. ETFS UK does not warrant or guarantee the accuracy or correctness of any information contained herein and any opinions related to product or market activity may change. Any third party data providers used to source the information in this communication make no warranties or representation of any kind relating to such data.

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Deal or no deal…stability will be restored

Deal or no deal…stability will be restored

ETFS Multi-Asset Weekly – Deal or no deal…stability will be restored

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Highlights

Grains post strong gains.

Is correction territory a buying opportunity for China?

Swedish and Swiss central banks go on the currency war offensive.

Defensive assets are likely to benefit from the uncertainty in Greece. The ‘No’ vote in the referendum yesterday received more than 60% of votes. Failure to make progress in debt negotiations elevates the risk of a default on the €3.5bn that is owed to the ECB on 20th July. Another default would almost certainly lead to the emergency liquidity assistance (ELA) being switched off and throw Greek banking system into an untenable position. While there is near term risk of greater volatility and downside equity risk, evidence of continued growth in the Eurozone and the US should help restore stability once the initial ‘event’  risk

Commodities

Grains post strong gains. Deteriorating growing conditions and lower acreage sown for corn and wheat saw the grains sector significantly outperform the broader commodities market. While Soybeans rode the grains momentum higher despite a record crop being planted in the US. Sugar also posted solid gains as the Indian monsoon season has begun to deteriorate. Compared to historical averages, rainfall was 14% lower than normal in June, potentially threatening the crop from the world’s second largest producer. An intensification of the El Niño could further exacerbate the disruption of crops, providing further price support. Soy is the likely exception, with an El Niño assisting growing conditions in South America. Meanwhile, the first increase in the US oil rig count has prompted crude price weakness, something that could gather momentum in the weeks ahead, if, as we expect oil production remains elevated and moves higher as rigs come back online.

Equities

Is correction territory a buying opportunity for China? Further stimulus by the People’s Bank of China last week was followed up by an easing in its crackdown on margin lending for equity market investments. The sharp slide in A-shares that the changes to margin lending rules has brought about has authorities concerned and policymakers are justifiably wary over excessive volatility and the potential threat to social stability. Policymakers are attempting to smooth the transition to market transparency and financial liberalisation and will likely continue to be supportive with fresh policy measures. The continuing Greek debt crisis prompted sharp losses across most European bourses last week and in early trading this week, as the Greek government defaulted on an IMF repayment and Greek Prime Minister continued to urge citizens to vote ‘No’ at last weekend’s referendum. Citizens duly responded, with 60% of the vote. Expect more downside risk and volatility or equity markets.

Currencies

Swedish and Swiss central banks go on the currency war offensive. Currency wars continue to be waged in the background, as the Greek crisis takes the headlines. The lack of clarity surrounding the fate of Greece has given investors no respite from currency volatility. The Swedish Riksbank cut rates further into negative territory (4th cut in 2015) and coupled with additions to its QE program, is keen to keep any currency gains in check (because long end rates remain elevated). The reason long-end rates are high is because of the lack of liquidity – a problem that larger central banks pursuing QE (the Fed, the ECB and BOJ) have not had to contend with. As a consequence, another issue is that the currency has strengthened more than expected, and hampers any benefit for the local economy. We expect the Riksbank will more closely target its currency in the future, as long as its QE program remains ineffective.

For more information contact:

ETF Securities Research team
ETF Securities (UK) Limited
T +44 (0) 207 448 4336
E  info@etfsecurities.com

Important Information

General

This communication has been issued and approved for the purpose of section 21 of the Financial Services and Markets Act 2000 by ETF Securities (UK) Limited (”ETFS UK”) which is authorised and regulated by the United Kingdom Financial Conduct Authority (”FCA”).

Investments may go up or down in value and you may lose some or all of the amount invested.  Past performance is not necessarily a guide to future performance. You should consult an independent investment adviser prior to making any investment in order to determine its suitability to your circumstances.

The information contained in this communication is for your general information only and is neither an offer for sale nor a solicitation of an offer to buy securities. This communication should not be used as the basis for any investment decision. Historical performance is not an indication of future performance and any investments may go down in value.

This communication may contain independent market commentary prepared by ETFS UK based on publicly available information. Although ETFS UK endeavours to ensure the accuracy of the content in this communication, ETFS UK does not warrant or guarantee its accuracy or correctness. Any third party data providers used to source the information in this communication make no warranties or representation of any kind relating to such data. Where ETFS UK has expressed its own opinions related to product or market activity, these views may change. Neither ETFS UK, nor any affiliate, nor any of their respective, officers, directors, partners, or employees accepts any liability whatsoever for any direct or consequential loss arising from any use of this publication or its contents.

ETFS UK is required by the FSA to clarify that it is not acting for you in any way in relation to the investment or investment activity to which this communication relates. In particular, ETFS UK will not provide any investment services to you and or advise you on the merits of, or make any recommendation to you in relation to, the terms of any transaction.  No representative of ETFS UK is authorised to behave in any way which would lead you to believe otherwise. ETFS UK is not, therefore, responsible for providing you with the protections afforded to its clients and you should seek your own independent legal, investment and tax or other advice as you see fit.

This document is not, and under no circumstances is to be construed as, an advertisement or any other step in furtherance of a public offering of shares or securities in the United States or any province or territory thereof. Neither this document nor any copy hereof should be taken, transmitted or distributed (directly or indirectly) into the United States.

Other than as set out above, investors may contact ETFS UK at +44 (0)20 7448 4330 or at retail@etfsecurities.com to obtain copies of prospectuses and related regulatory documentation, including annual reports. Other than as separately indicated, this communication is being made on a ”private placement” basis and is intended solely for the professional / institutional recipient to which it is delivered.

Third Parties

Securities issued by each of the Issuers are direct, limited recourse obligations of the relevant Issuer alone and are not obligations of or guaranteed by any of UBS AG, Merrill Lynch Commodities Inc. (”MLCI”), Bank of America Corporation (”BAC) or any of their affiliates. UBS AG, MLCI and BAC, Shell Trading Switzerland, Shell Treasury, HSBC Bank USA N.A., JP Morgan Chase Bank, N.A., Deutsche Bank AG any of their affiliates or anyone else or any of their affiliates. Each of UBS AG, Merrill Lynch Commodities Inc. (”MLCI”), Bank of America Corporation (”BAC) or any of their affiliates. UBS AG, MLCI and BAC, Shell Trading Switzerland, Shell Treasury, HSBC Bank USA N.A., JP Morgan Chase Bank, N.A. and Deutsche Bank AG disclaims all and any liability whether arising in tort, contract or otherwise (save as referred to above) which it might have in respect of this document or its contents otherwise arising in connection herewith.

”Dow Jones,” ”UBS”, DJ-UBS CISM,”, ”DJ-UBS CI-F3SM,” and any related indices or sub-indices are service marks of Dow Jones Trademark Holdings LLC (”Dow Jones”), CME Group Index Services LLC (”CME Indexes”), UBS AG (”UBS”) or UBS Securities LLC (”UBS Securities”), as the case may be, and have been licensed for use by the Issuer. The securities issued by CSL although based on components of the Dow Jones UBS Commodity Index 3 month ForwardSM are not sponsored, endorsed, sold or promoted by Dow Jones, CME Indexes, UBS, UBS Securities or any of their respective subsidiaries or affiliates, and none of Dow Jones, CME Indexes, UBS, UBS Securities, or any of their respective subsidiaries or affiliates, makes any representation regarding the advisability of investing in such product.

Greece Teetering on the Brink of Default

Greece Teetering on the Brink of Default

ETFS Multi-Asset Weekly – Greece Teetering on the Brink of Default

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Highlights

•    Weather driving sharp movements in agricultural commodities.
•    Equity markets to price in default?
•    Haven demand and economic recovery fuelling US dollar higher.

A sharp re-pricing of risk is likely to follow Greece’s decision to hold the question of accepting its creditor terms to a referendum. Capital controls have been implemented to stem outflows from Greece’s banks while the ECB has frozen the Emergency Liquidity Assistance to Friday’s levels. Greece still owes the IMF €1.6bn tomorrow. Failure to pay could descend the country into chaos, marking the first sovereign default in the euro area since its creation. We believe that demand for defensive assets such as gold and the US dollar are likely to be key beneficiaries of the unfolding crisis.

Commodities

Weather driving sharp movements in agricultural commodities. Rain in the US delayed the harvesting of wheat and potential the sowing of soy, acting as a catalyst for price gains of 9.0% and 2.3% respectively. Meanwhile strong winds in Iowa and Illinois knocked over young corn stalks driving the price of corn up 5.2%. An acreage report from the USDA out tomorrow is likely to revise the estimates for planting of soy from what was expected to be a record high when the prospective planting survey was conducted in March. An intensifying El Niño weather pattern will likely see further disruption to crops this year. We believe that drier conditions in Australia, India and West Africa will drive wheat, sugar and cocoa prices higher. Better soy growing conditions in the US and South America that will result from an intensified El Niño will mitigate any lower planting intentions for soy, acting as a negative weight on price.

Equities

Equity markets to price in default? The continuing Greek debt saga led to choppy trading in Europe last week, with most bourses ending the week higher on optimism that some sort of deal would have been brokered over the weekend to avoid Greek defaulting on its IMF loan tomorrow. The referendum and capital controls now throw doubt as to whether a solution can be quickly found. European equity markets are faltering as a repricing of risk takes place. Meanwhile, the MSCI China A-Shares index has declined by closed to 20% in the past two weeks. While the Chinese domestic equity market has rallied more than 100% in the past year (even after the correction), the authorities are keen to the see that sentiment does not unravel. Over the weekend the People’s Bank of China cut interest rates by 25bps and lowered the reserve requirement ratio for small banks by 50bps.

Currencies

Haven demand and economic recovery fuelling US dollar higher. Greek financial woes drove the US dollar 2% higher against the Euro. The ongoing saga is likely to continue to favor the US dollar, as near-term solutions are likely to be met with more arduous negotiations. With the threat of an accident always around the corner, it is clear why haven currencies are sought after. While the Swiss franc has traditionally been treated as a haven currency, the Swiss National Bank has tried to lean against the wind with verbal intervention. After the SNB’s head declared its currency significantly overvalued, the currency declined 2.2% in the week against the US dollar. US non-farm payrolls due on Thursday and manufacturing ISM on Wednesday are two indicators that will be market will be looking at closely to assess whether the Fed is still on track to raise rates in September. Once the US starts to raise rates, we believe that increases will be gradual and highly data dependent. That could slow the pace of the current US dollar rally.

For more information contact:

ETF Securities Research team
ETF Securities (UK) Limited
T +44 (0) 207 448 4336
E  info@etfsecurities.com

Important Information

General

This communication has been issued and approved for the purpose of section 21 of the Financial Services and Markets Act 2000 by ETF Securities (UK) Limited (”ETFS UK”) which is authorised and regulated by the United Kingdom Financial Conduct Authority (”FCA”).

Investments may go up or down in value and you may lose some or all of the amount invested.  Past performance is not necessarily a guide to future performance. You should consult an independent investment adviser prior to making any investment in order to determine its suitability to your circumstances.

The information contained in this communication is for your general information only and is neither an offer for sale nor a solicitation of an offer to buy securities. This communication should not be used as the basis for any investment decision. Historical performance is not an indication of future performance and any investments may go down in value.

This communication may contain independent market commentary prepared by ETFS UK based on publicly available information. Although ETFS UK endeavours to ensure the accuracy of the content in this communication, ETFS UK does not warrant or guarantee its accuracy or correctness. Any third party data providers used to source the information in this communication make no warranties or representation of any kind relating to such data. Where ETFS UK has expressed its own opinions related to product or market activity, these views may change. Neither ETFS UK, nor any affiliate, nor any of their respective, officers, directors, partners, or employees accepts any liability whatsoever for any direct or consequential loss arising from any use of this publication or its contents.

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This document is not, and under no circumstances is to be construed as, an advertisement or any other step in furtherance of a public offering of shares or securities in the United States or any province or territory thereof. Neither this document nor any copy hereof should be taken, transmitted or distributed (directly or indirectly) into the United States.

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Third Parties

Securities issued by each of the Issuers are direct, limited recourse obligations of the relevant Issuer alone and are not obligations of or guaranteed by any of UBS AG, Merrill Lynch Commodities Inc. (”MLCI”), Bank of America Corporation (”BAC) or any of their affiliates. UBS AG, MLCI and BAC, Shell Trading Switzerland, Shell Treasury, HSBC Bank USA N.A., JP Morgan Chase Bank, N.A., Deutsche Bank AG any of their affiliates or anyone else or any of their affiliates. Each of UBS AG, Merrill Lynch Commodities Inc. (”MLCI”), Bank of America Corporation (”BAC) or any of their affiliates. UBS AG, MLCI and BAC, Shell Trading Switzerland, Shell Treasury, HSBC Bank USA N.A., JP Morgan Chase Bank, N.A. and Deutsche Bank AG disclaims all and any liability whether arising in tort, contract or otherwise (save as referred to above) which it might have in respect of this document or its contents otherwise arising in connection herewith.

”Dow Jones,” ”UBS”, DJ-UBS CISM,”, ”DJ-UBS CI-F3SM,” and any related indices or sub-indices are service marks of Dow Jones Trademark Holdings LLC (”Dow Jones”), CME Group Index Services LLC (”CME Indexes”), UBS AG (”UBS”) or UBS Securities LLC (”UBS Securities”), as the case may be, and have been licensed for use by the Issuer. The securities issued by CSL although based on components of the Dow Jones UBS Commodity Index 3 month ForwardSM are not sponsored, endorsed, sold or promoted by Dow Jones, CME Indexes, UBS, UBS Securities or any of their respective subsidiaries or affiliates, and none of Dow Jones, CME Indexes, UBS, UBS Securities, or any of their respective subsidiaries or affiliates, makes any representation regarding the advisability of investing in such product.