Thursday October 17th, 2013
Risk assets around the globe experienced volatility surrounding the mid-month FOMC meeting, which caught much of the market by surprise when the Fed held off on tapering quantitative easing. After preparing markets over the past months for the beginning of tapering, the Fed ultimately decided that recent data, in particular a weak August jobs figure, was not strong enough to warrant a reduction in stimulus. As a result, equities rebounded higher, with the S&P briefly making new all time highs before giving up some of its gains into month end. The U.S. dollar saw weakness, and U.S. yields sank lower after briefly testing 3% on the 10yr U.S. Treasury. Middle East tensions waned, as a diplomatic approach prevailed, which saw a reversal in safe haven flows across energy and gold. China’s economic data was positive showing signs of stabilization, which helped emerging market assets recover higher after a quarter of weakness. The Bank of Canada maintained a tightening bias, even though economic indicators have kept current policy rates at 1%. This is consistent with most central bankers who have repeated their commitment to keeping rates at current levels for an extended period of time.
The Fund’s top performers were equities in the Materials sector. In particular, the fund experienced outsized gains from Hudbay Minerals and First Quantum Minerals. Intrepid Potash was also a top performer as the market re-evaluated the impact of the dismantling of the Russian potash cartel. The Fund’s largest laggards were in physical commodities where crude oil futures dropped on concerns of slowing global growth and easing tensions in Syria. Positions in precious metals gold and silver ETFs also saw weakness.