• Long-term borrowing costs from the U.S. to Germany and Japan hit their highest in decades on Tuesday due to ballooning government debt and geopolitics, raising borrowing costs for companies and households and complicating policy. Bond markets ‌are entering an era where the inflation and interest rate outlook is more uncertain, and the upside risks are greater, as U.S. President Donald Trump’s policies, from tariffs to war, upend the global order.
• Debt levels in developed countries are reaching thresholds that look increasingly unsustainable, with the U.S. debt pile nearing $40 trillion. The Iran war is dragging on, pushing up oil prices and inflation and hitting global growth. In addition, massive borrowing by technology companies to fund a buildout of AI infrastructure is ​competing with demand for government bonds.
• In addition, massive borrowing by technology companies to fund a buildout of AI infrastructure is ​competing with demand for government bonds. Bond yields' recent surge "suggests investors are losing patience with fiscal profligacy," said Jonas Goltermann, chief markets economist at Capital Economics.
• Thirty-year bond yields in the United States, the ⁠world's deepest and most systemically crucial government bond market, hit their highest since 2007earlier on Tuesday as oil prices rose back above $90, fanning inflation worries as US.-Iran peace hopes faded. In Japan, inflation angst and expectations that the central bank could hike interest rates as early as Septemberpushed 10-year borrowing costs to a three-decade high.
• In Europe, Germany's 10-year Bund yield touched its highest since 2011, French yields were at their highest since 2008, and Britain's 30-year borrowing costs neared peaks hit in May that marked the ​highest levels since 1998. When a bond's yield rises, its price falls.
• The selloff ​in government bond markets matters because the repercussions ripple through economies. Sovereign debt sets the benchmark for borrowing costs for companies and other loans, including household mortgages

(Source: Reuters)

• The Bank of England (BOE) will leave interest rates unchanged at 3.75% for the rest of the year, according to a strong majority of economists polled by Reuters, ​clinging to a view they've held since the U.S.-Israeli war on Iran began in late February.
• The UK ‌economy has remained mostly resilient since then, with little evidence of any spillover from higher energy prices into the broader economy. That has given the central bank room to stay on the sidelines. But three of the nine Monetary Policy Committee members voted for an ​immediate rate rise to 4.0% at the July meeting, up from two in the previous meeting.
• Inflation likely ​rose to 2.9% in July from 2.6% in June, further above the BOE's 2% ⁠target, according to a separate Reuters poll ahead of official data due on Wednesday. But in its latest set ​of quarterly forecasts, the BOE expects inflation to rise above 3% later this year. Still, nearly 90% of economists polled ​by Reuters, 56 of 64, expect the Monetary Policy Committee to leave rates unchanged at 3.75% this year, up from 83% last month. Six expected a hike by then, and another two forecast a cut. The poll was conducted August 13-18.
• No economists forecast a rate ​change at the next MPC meeting in September. Financial markets are still pricing in one quarter-point rate rise ​by year-end. Elizabeth Martins, UK economist at HSBC, said "a big rebound in energy prices would certainly change things. But the real game changer ‌for ⁠the MPC, I think, is around second-round effects."
• Crude oil prices, trading at about $91 a barrel, are still about 25% above pre-war levels as the Strait of Hormuz, a key shipping route for Middle Eastern oil, is still closed. The most recent set of labour market data showed weak hiring and pay growth within the MPC's tolerance range, which economists ​said is likely to keep ​policymakers on the sidelines ⁠for now.

(Source: Reuters)

• Local inflation accelerated in July, with the latest data from the Statistical Institute of Jamaica (STATIN) showing consumer prices rose 1.2%, following a 0.8% increase in June. The stronger monthly outturn pushed 12-month point-to-point (P2P) inflation to 7.5%, further above the Bank of Jamaica's (BOJ’s) 4.0%-6.0% target range and reinforcing the central bank's warning that inflation would temporarily breach its ceiling amid higher transportation, food and utility costs.
• July's increase was driven primarily by a 6.3% rise in the 'Transport' division, reflecting the implementation of the second phase of increases in route taxi and hackney carriage fares effective July 1, 2026. The fare adjustment, which was identified by the BOJ as a key upside risk to inflation, contributed to an 8.7% increase in the index of the ‘Passenger transport by road’ and a 13.6% P2P increase in Transport.
• Food prices also continued to trend upward, with the 'Food and Non-Alcoholic Beverages' division rising 0.6%. Higher prices for agricultural produce resulted in a 2.3% increase in the index for 'Vegetables, tubers, plantains, cooking bananas and pulses'. Food and Non-Alcoholic Beverages recorded a 9.4% P2P increase, making it one of the main contributors to the annual rise in consumer prices.
• Additional upward pressure came from the 'Housing, Water, Electricity, Gas and Other Fuels' division, which increased 0.9%, driven mainly by higher electricity, water and sewage rates. On a 12-month basis, the division recorded 5.2% inflation, highlighting the broader pass-through of higher utility and fuel-related costs into domestic prices.
• Looking ahead, weather-related risks will be an important consideration for food prices, particularly if El Niño conditions continue to intensify and affect domestic agricultural production or reduce the supply of key crops locally. At the same time, uncertainty surrounding global energy prices due to the prolonged Middle East conflict presents another source of upside risk, given the potential pass-through to transportation, electricity and other domestic fuel and fertiliser costs. The extent to which these pressures persist or become embedded in inflation expectations will be important in determining the trajectory of headline inflation.
• Against this backdrop, attention turns to the BOJ's August 19 monetary policy decision, which will mark the final MPC decision under Governor Richard Byles, whose term ends on August 18. While the recent breach of the target range is consistent with the MPC's expectation that inflation would temporarily exceed its ceiling, the combination of weather-related food risks and uncertainty around energy prices could keep inflation elevated for longer than previously anticipated. The BOJ could therefore maintain the policy rate at 5.50% while monitoring whether these upside risks begin to translate into more persistent domestic inflationary pressures.

(Sources: STATIN, BOJ, & NCBCM Research)

• Carreras Limited (CAR) kept the fire burning in Q2 2026 despite the higher Special Consumption Tax (SCT), with net profit increasing 15.3% year-over-year (YoY) to J$1.94Bn for the three months ended June 30, 2026 (Q2 2026). The quarter provided the first indication of CAR's performance under the higher SCT, which took effect on May 1, 2026, increasing the tax on cigarettes from J$17.00 to J$20.00 per stick.
• Revenues rose 4.6% YoY to J$5.76Bn, supported by a portfolio-wide price increase implemented during the quarter, which helped offset the expected decline in cigarette volumes following the SCT increase. The company also reported an improvement in direct cost, which was down 3.4%. Reflecting improved pricing, favourable mix and continued cost discipline, gross profit rose 10.8% to J$3.43Bn, with gross margin expanding by 340 basis points to 59.6% from 56.2%.
• The stronger gross margin flowed through to the bottom line, underpinned by disciplined expense management. Administrative, distribution and marketing expenses were broadly flat at J$860.24Mn, while lease interest expense declined 20.5% to J$17.65Mn. Consequently, profit before tax advanced 15.7% to J$2.59Bn. Although income tax expense increased 17.0% to J$652.54Mn, earnings growth remained robust, with net profit margin widening to 33.7% from 30.6%. The earnings performance highlights the Company's ability to protect profitability despite the near-term volume pressure associated with the higher cigarette tax.
• The Q2 performance added to Q1 combined to create a particularly strong first half, with H1 2026 revenue rising 28.0% YoY to J$12.69Bn and net profit increasing 43.9% to J$4.45Bn. Topline benefited from higher year-to-date volumes as well as the Q2 price increase, while gross profit advanced 30.6% to J$7.45Bn, lifting  gross margin by 120bps to 58.7%. Meanwhile, administrative, distribution and marketing expenses declined 2.7% to J$1.59Bn, underscoring continued cost discipline.
• The combination of robust earnings, strong operating cash flow and a relatively healthy liquidity position reinforce CAR's capacity to maintain attractive shareholder returns while preserving financial flexibility. Cash generation remained a key strength, with operating cash flow increasing 18.3% to J$5.45Bn in H1 2026, while cash and cash equivalents rose 45.7% to J$3.29Bn. Strong liquidity supported continued shareholder distributions, with dividends paid increasing 7.5% YoY to J$4.17Bn.
• Looking ahead, the higher SCT is likely to remain a key factor influencing CAR's performance during the remainder of 2026, with the Company expected to balance further pricing actions against consumer affordability, cigarette volumes and the risk of increased illicit trade. While the initial Q2 results suggest that pricing has successfully cushioned the impact of the tax increase on revenue and margins, sustained volume pressure could become more pronounced in subsequent quarters. Nevertheless, the continued expansion of CAR's Vuse (e-cigarette) and reduced-risk product portfolio, alongside disciplined cost management and efforts to mitigate illicit trade, should provide some offset while supporting the preservation of profitability and market share.
• CAR’s stock has increased 87.7% year-to-date, closing at $33.99 on Monday, August 17, 2026. At its current price, CAR trades at a price-to-earnings (P/E) ratio of 20.7x, representing a sizeable premium to the Main Market Distribution & Manufacturing average of 14.85x. The premium suggests that much of CAR's strong earnings momentum is already reflected in the share price.

(Sources: JSE & NCBCM Research)

• Jamaica's listed fuel distributors stepped on the gas during the June quarter, as higher fuel prices, stronger volumes and network expansion drove robust topline growth. Future Energy Source Company Limited’s (FESCO’s) turnover climbed 41.4%, while Regency Petroleum Company Limited (RPL) more than doubled to J$894.95. However, higher input costs and a shift towards lower-margin sales weighed on gross margins at both companies, limiting the conversion of revenue growth into earnings. Consequently, FESCO's net profit increased by a comparatively modest 5.2% to J$146.59Mn, while RPL delivered a stronger 49.5% increase to J$53.86Mn.
• FESCO’s FY2026/27 got off to a strong start, with revenue reaching a new quarterly high of 41.4% buoyed by higher fuel prices and continued growth in fuel volumes across its expanding retail network. Gross profit rose at a slower 27.6% to J$552.61Mn, resulting in gross margin contracting 60bps to 5.4% from 6.0%. The margin compression reflected higher petroleum acquisition costs and the industry-wide fuel margin pressures arising from higher supply costs. It also highlights the trade-off between FESCO's strong volume-led expansion and the relatively thin margins inherent in fuel distribution.
• Despite the weaker gross margin, FESCO maintained strong operating momentum. Operating profit surged 36.6% to J$230.53Mn, as the 18.5% increase in operating and administrative expenses to J$315.48Mn remained below the pace of gross profit growth. Higher expenses reflected continued investment in its company-operated service station network, staffing and management capacity, LPG infrastructure and other strategic assets.
• Further down the income statement, however, higher financing and tax costs constrained earnings growth. Finance costs more than doubled to J$63.00Mn, amid the Company's ongoing refinancing and investment programme, while the expiry of its five-year Junior Market tax concession resulted in a J$20.94Mn income tax charge, compared with nil a year earlier. Consequently, net profit growth was limited to 5.2%, materially trailing the increase in revenue and operating profit.
• RPL also kept its expansion strategy in high gear, with Q2 2026 revenue surging 108% YoY to J$894.95Mn for Q2 FY2026, bolstered by higher automotive fuel volumes in Westmoreland, increased fuel prices and the acquisition of Yaad Man Haulage (Ja) Limited’s LPG operations. Gross profit increased 58.7% to J$145.47Mn, although the gross margin narrowed to 16.3% from 21.3%. The contraction reflected a greater contribution from lower-margin fuel sales and the Company's efforts to limit the pass-through of higher petroleum costs to customers.
• Nevertheless, operating profit climbed 68.7% to J$77.39Mn despite a 47.6% increase in operating expenses on the back of higher depreciation charges on its fixed assets along with higher staff costs as RPL expands its operations. Similar to FESCO, however, higher financing costs absorbed some of the operating gains, with finance expenses surging 139.0% to J$23.53Mn due to higher loan interest, bank charges and one-time commitment fees related to its recent financing from CIBC Caribbean (Jamaica) Limited. Overall, the strong Q2 result lifted H1 2026 net profit 57.3% to J$80.39Mn, on an 80.2% increase in revenue to J$1.56Bn, supported by higher fuel volumes and prices and the contribution from the Yaad Man acquisition.
• Looking ahead, both companies remain focused on network expansion and diversifying their energy offerings, although the outlook remains sensitive to ongoing geopolitical conflict, financing costs and broader consumer pressures. FESCO is expected to continue expanding its service station footprint, LPG infrastructure and dealer-operated locations. Meanwhile, RPL is prioritising LPG market-share growth, further service station development and opportunities in Western Jamaica. However, persistent geopolitical tensions and volatile global petroleum prices remain key risks, as higher acquisition costs could further squeeze margins if the companies are unable to fully pass these increases on to consumers. At the same time, continued network expansion should support volumes, providing some offset to margin pressure.
• Investors have rewarded both companies' growth trajectories, with FESCO and RPL share prices gaining 22.8% and 10.1% YTD to J$3.55 and J$4.48, respectively, as at August 17, 2026. However, their valuations tell different stories. FESCO trades at 13.17x earnings, below the Junior Market Distribution sector average of 16.0x, while RPL trades at a considerably higher 45.71x.

(Sources: JSE & NCBCM Research)

• Local economic activity in the Dominican Republic (DOMREP) continues to drive demand for financing, particularly in the private sector. Of note, private credit registered a year-on-year increase of 9.1% at the close of June 2026, according to the Association of Multiple Banks of the Dominican Republic (ABA).The country’s loan portfolio accelerated relative to the accumulated growth of 7.4% recorded in December 2025, with an additional injection of more than RD$80Bn during the first half of 2026, equivalent to 1.0% of the gross domestic product (GDP).
• According to the ABA, the greatest dynamism in financing has been concentrated mainly in the commercial and mortgage segments, supporting strategic sectors for economic growth, including tourism, construction, transportation, and private investment. The association highlighted that channelling resources toward productive activities strengthens the Dominican economy’s capacity to sustain its growth, particularly in an international environment marked by heightened uncertainty.
• The Central Bank of the Dominican Republic (BCRD) projects that credit to the private sector in national currency will continue to accelerate gradually during 2026, reaching 10.5% growth by the end of the year. This expansion would represent an increase in financing of RD$149,818 million, equivalent to 1.9% of GDP. The ABA noted that credit behaviour demonstrates the role of the financial system in supporting activities that are driving the economy, with a particular impact on sectors such as tourism and construction.
• Alongside the increase in credit, public deposits accelerated, rising from 9.2% in December 2025 to 14.9% in June 2026. During the first six months of the year, the deposit base available to financial intermediation entities increased by RD$257,124 million, equivalent to 3.3% of GDP. The ABA added that statistics from the Superintendency of Banks show that the financial system maintains a liquid asset ratio above 40% and a stable delinquency rate below 2.0%.

(Source: Dominican Today)

• Brazil's economy expanded just 0.2% in the second quarter from 1.1% in the first quarter, a central ​bank indicator showed on Monday, signalling a loss of ‌momentum from the year's strong start, particularly in the all-important services sector.
• The IBC-Br economic activity index, viewed by markets as a proxy for gross domestic product, ​fell 0.6% in June from the previous month, also on ​a seasonally adjusted basis. Economists polled by Reuters had ⁠expected a 0.53% contraction.
• Central bank data showed that the positive quarterly reading for the IBC-Br was driven mainly by industry, which expanded ​0.5% from the previous quarter. Agriculture rose 0.3%, while services, the ​backbone of Brazil's economy, shrank 0.1%. The index is compiled using the central bank's ‌estimates ⁠for those sectors, along with projections for taxes linked to production, which increased 0.1% in the second quarter from the preceding three months.
• The second-quarter slowdown was widely expected. The Finance Ministry has said it ​anticipated softer growth ​as the effects ⁠of government support measures faded following a series of credit-boosting initiatives announced by leftist President Luiz Inacio ​Lula da Silva ahead of his October re-election bid.
• Restrictive ​borrowing ⁠costs have also weighed on economic activity. Although Brazil's central bank began an easing cycle in March, interest rates remain among the highest in real ⁠terms ​globally, at 14%, as policymakers seek to ​bring inflation, which stood at 4.44% in the 12 months through July, back to the ​official 3% target.

(Source: Reuters)

• Canada's annual inflation rate accelerated to 3% in July, slightly more than expected, as renewed United States-Iran tensions drove gasoline ​prices, while the cost of travel tours also rose. On a monthly basis, the consumer price index rose by 0.5%, Statistics Canada said, once again driven by an increase in gasoline costs.
• The inflation rate now sits at the ceiling of the Bank of ​Canada's (BoC’s) 1% to 3% control range. Analysts polled by Reuters had projected consumer ​prices to rise 2.9% annually and 0.4% on a monthly basis ⁠in July
• The increase in headline inflation rate had been widely anticipated because of ​higher energy prices, leaving the trend of underlying or core inflation as a more important ​signal for the BoC. Core inflation measures CPI-trim and CPI-median came at 1.9% and 2%, respectively. Both measures were at 1.9% in the prior month, StatsCan said
• Economists have said that with core ​inflation largely hovering around 2%, the midpoint of the central bank's 1% to 3% ​control range, the BoC is likely to keep its key policy rate on hold for the rest ‌of ⁠the year. Gasoline was the major driver for the annual rise in CPI, with prices accelerating 25.7% in July against an increase of 20.5% in June, the statistics agency noted. Prices for travel tours also contributed to the yearly rise in July as consumers ​paid more for hotels ​and flights to the ⁠United States, especially to the cities that hosted the football World Cup.
• However, a slower rise in grocery prices moderated the CPI, ​with food purchased from stores rising by 3.1% in July after ​posting a ⁠9% acceleration in June. Despite the slowdown in grocery costs, July was the 18th consecutive month that grocery price inflation outpaced the all-items CPI.  Shelter costs, which include rents and ⁠mortgage interest ​costs, continued to be subdued, with the costs ​rising 1.3% in July.

(Source: Reuters)

• Japan's economy slowed in the second ​quarter and missed market forecasts on softer household and business spending, highlighting the fragile nature of its recovery as the Middle East war clouds the outlook. Japan's economy slowed in the second quarter and missed market forecasts on softer household and business spending, highlighting the fragile nature of its recovery as the Middle East war clouds the outlook.
• However, long-term ‌bond yields hit a three-decade high as investors brushed aside the soft reading as reflecting one-off factors and focused more on mounting inflationary risks that could prod the Bank of Japan to raise interest rates next month.
• Gross domestic product rose 1.1% in annualised terms, government data showed on Monday, missing a median market estimate of 2.0% in a Reuters poll and below a revised 1.9% expansion in the previous quarter. While the data revealed some temporary soft patches in demand, analysts say robust underlying momentum and persistent price pressures are likely to keep the case for imminent interest rate hikes intact.
• Reuters reports that the BOJ is set to raise rates as soon as September and is considering a more aggressive pace of tightening thereafter to avoid falling behind the curve on inflation. The benchmark 10-year Japanese government bond (JGB) yield rose for a sixth straight session on Monday to hit a 30-year high of 2.925%, as investors continued to price in BOJ rate hikes sooner and faster than earlier expected. Private consumption was the biggest disappointment in the GDP data, falling 0.02% versus market expectations for a 0.5% increase, the first drop in eight quarters.
• Analysts said the weakness was due in part to lower school fees households paid thanks to subsidies, which pushed down headline private consumption but lifted government spending. Capital spending, a key driver of private demand, fell 1.2% in the second quarter, confounding market forecasts for a 0.4% increase. However, capital expenditure, as well as overall preliminary GDP, tend to be revised higher with updated figures. Exports remained resilient thanks to solid U.S. demand for Japanese hybrid vehicles and sustained global investment in artificial intelligence that supported shipments of semiconductor-related equipment and components.
• Looking ahead, analysts cautioned that rising import costs and mounting upstream price pressures could eventually feed through to consumers, posing a risk to spending later this year. Aside ⁠from rising fuel costs from the Middle East conflict, a weak yen has lifted import prices and broader cost-of-living for households, posing a headache for policymakers. Such price pressures have led to a flurry of hawkish comments from BOJ policymakers that bolstered the case for an early rate hike.

(Source: Reuters)

• For the second quarter ending June 30, 2026 (Q2 2026), Sagicor Group Jamaica Limited (SJ) and Dolla Financial Services Limited (DOLLA) reported divergent results. SJ’s net profit attributable to stockholders fell 40.0% year-over-year to $2.85Bn, while DOLLA’s grew 28.0% to $169.00Mn.
• SJ’s decline largely reflected Hurricane Melissa-related claims provisioning, higher onerosity¹ and the absence of prior-year gains.
• SJ’s shortfall starts with the insurance business. Despite a 3.2% increase in insurance revenue to $15.61Bn, service expenses climbed 15.4% to $12.44Bn on elevated claims provisioning related to Hurricane Melissa. This cut insurance service result by 24.6% to $2.66Bn. Meanwhile, net investment income improved 4.6% to $9.33Bn, as a 16.4% increase in net interest income to $8.07Bn compensated for a 40.3% aggregate decline in realised and unrealised capital gains. The group also reported a $1.90Bn or 23.3% increase in other operating expenses to $10.07Bn, leaving profit before taxes 32.5% lower at $4.20Bn.
• SJ’s Q2 results contributed to a 44.3% decline in its H1 2026 performance. H1 insurance results are down 29.0% to $4.32Bn, net investment income is down 11.6% to $16.67Bn, while operating expenses grew 14.9% to $18.70Bn.
• As for DOLLA, earnings growth benefited from lower expected credit loss provisions of $34.34Mn (-66.2%), which supported a 23.5% revenue jump. The company had prior-year provisions and write-offs tied to fraudulent loans and continued to benefit from strengthened underwriting and collections. Notably, interest income on loans was also up 3.6%, supported by a larger loan book, but this was largely negated by a 22.2% increase in interest expense.
• Still, a slower rise in administrative expenses (+5.7%) brought its efficiency ratio to 42% from 56%, which supported earnings. Consequently, profit before taxation grew 47.0% to $194.00Mn, which fed into a 51.6% increase to $382.00Mn year-to-date.
• Looking ahead, SJ expects its balance sheet, robust risk and governance frameworks and diverse revenue base to support long-term value creation. Still, the group’s earnings remain exposed to claims development and market losses across its insurance books. Meanwhile, DOLLA expects to convert its strengthened liquidity² into earning assets – prioritising quality secured lending and further reduction of non-performing exposures. However, the group carries concentration in high-yield, single-market lending, where a 14.0% non-performing ratio and elevated funding costs leave limited room for slippage.
• SJ’s share price has advanced 3.2% year to date to $41.46 as at the close of Thursday, August 13, 2026. At this price, the stock trades at a P/B of 1.4x, which is above the Main Market Financial sector average of 1.1x. Within the same period, DOLLA has gained 17.2% year-to-date, closing at $3.21 and trading at a P/B of 4.4x. This is below the Junior Market Financial sector average of 1.4x.

_______________________

¹Onerosity refers to insurance contracts that are onerous under IFRS 17, meaning expected claims and expenses exceed expected premiums. Insurers must recognise the loss on such contracts immediately rather than over the life of the policy, so higher onerosity depresses current-period earnings.

²The $1.50Bn bond issuance strengthened DOLLA’s liquidity by adding fresh lending capacity.

(Sources: Sagicor Group Jamaica Limited & Dolla Financial Services Limited Unaudited Financial Statements & NCBCM Research)