• The U.S. Treasury said on Monday it expects to borrow US$243.0Bn in the second quarter of 2024 (Q2 2024), US$41.0Bn more than the January estimate. This was largely due to lower cash receipts, partially offset by a higher cash balance at the beginning of the quarter.
• The Q2 2024 financing estimate assumes a cash balance of US$750.0Bn at the end of June, the Treasury said in a statement. Attention now turns to Wednesday when the Treasury will detail its borrowing plans and auction sizes of various maturities.
• Treasury officials said on Monday the borrowing estimates assumed no change to the Fed's current US$60.0Bn per month roll-off of Treasuries. It also announced that it expects to borrow US$847.0Bn in Q3 2024, as it projects a cash balance of US$850.0Bn at the end of September.
• With yields near the highest in months, the market has been highly attuned to the supply of Treasuries as concerns mount over rapidly rising U.S. debt.
• The Federal Open Market Committee is expected to keep its benchmark rate unchanged on Wednesday at the end of its two-day meeting. Speculation is growing that the Federal Reserve will not pivot to easing rates until late this year, given the U.S. economic strength and inflation that is stuck above its target rate of 2.0%.
• At the same time, the Fed is expected to taper its quantitative tightening program soon, in which it lets bonds it bought during the pandemic mature without replacing them on its balance sheet. That will affect how much cash the Treasury needs to raise via Treasury bills.

(Source: Reuters)

• A growing number of Federal Reserve officials don't see a return to the ultra-low interest rates that prevailed before the COVID-19 pandemic due to everything from ballooning federal deficits to demand for investments in green energy, artificial intelligence and domestic manufacturing.
• The U.S. economy has held up remarkably well in the face of the stiffest rate hikes in a generation, with unemployment low and growth mostly above trend until recently. Meanwhile, progress on returning inflation to the Fed's 2% target has stalled out this year after rapid gains last year, leading some to wonder whether something has changed that could require a generally higher level of interest rates to keep price increases in check.
• The heads of the Dallas and Cleveland regional Fed banks, for instance, sense something new is afoot. In April 2024, Dallas Fed President Lorie Logan, noted seven policymakers saw a longer-run policy rate of 3%, up from three with that view a year ago. Meanwhile, Cleveland Fed President Loretta Mester, raised her longer-run fed funds estimate "to reflect the continued resilience in the economy despite high nominal interest rates and higher model-based estimates of the equilibrium interest rate, R-star."
• To be sure, the shift seen in March's projections was small, and some like Fed Chair Jerome Powell cautioned against reading too much into it at this stage. Likewise, New York Fed President John Williams, a leading researcher into the R-Star concept has contended he expects a return to a low-rate world at some point.

(Source: Reuters)

• In a release to the Jamaica Stock Exchange, Supreme Ventures Limited advised that Game Park Limited, partner to its Ghanaian subsidiary, IBet SV Ghana Ltd was granted a ten (10) year lottery licence by the National Lottery Authority (NLA) in Ghana . IBet SV Ghana exclusively provides technical services to Game Park.
• The granting of this licence follows Game Park Limited satisfying the obligations under the one year provisional licence as a Third-Party Collaborator to operate a lottery in that country.
• The company noted that its partnership in Ghana marks a significant and historic milestone in its expansion strategy. By leveraging its Gaming Laboratories International (GLI) certified proprietary software and best-in-class live draws, SVL is aiming to bring its gaming products and technology to other parts of Africa and eventually other jurisdictions around the world.
• In Ghana, lottery revenue is expected to show a compound annual growth rate of 7.86% between 2023 and 2027. Additionally, formalised sports lottery popularity is growing rapidly in Ghana, especially amongst the male populace. One study found that 96% of males engaged in sports lottery in Ghana were within the age bracket of 21-40 years, which makes online lottery and mobile penetration a good strategy to attract and maintain this segment.
• This bodes well for SVL’s reach, scale and revenue growth opportunities as the company is now able to sell its products in this significantly larger market of 34Mn people.

(Sources: JSE, SVL Annual Report and NCBCM Research)

• According to data on the Producer Price Index (PPI) released by the Statistical Institute of Jamaica (STATIN), the Mining & Quarrying Index increased by 0.8% in March, while prices in the Manufacturing industry inched up 0.1%.
• The 'Bauxite Mining & Alumina Processing' category was the main driver for the 0.8% decline in the index for the Mining & Quarrying industry. The index for the other major group, ‘Other Mining and Quarrying’ moved up by 0.2%. These increases were due to the depreciation of the Jamaican dollar vis-à-vis the United States dollar.
• The increase in the Manufacturing industry was mainly due to increases in the index for the major groups: ‘Food, Beverages & Tobacco’ (0.2%) and ‘Refined Petroleum Products’ (0.6%), due mainly to higher fuel prices on the international market.
• For the period March 2023 – March 2024, the index for the Mining & Quarrying industry declined by 7.1%. This was a result of a 7.5% fall in the index for the major group, ‘Bauxite Mining & Alumina Processing’.
• However, for the same point-to-point period, the Manufacturing industry index increased by 2.2%. Contributing to this increase were the major groups: ‘Refined Petroleum Products’ (7.7%) and ‘Food, Beverages & Tobacco (1.6 %)’.
• Geopolitical tensions in Europe and the Middle East pose risks that could disrupt the oil supply and supply chain, which could result in higher costs for producers.
• The Producer Price Index (PPI) is a significant economic indicator that tracks the average fluctuation in selling prices that domestic producers of goods and services experience over time.

(Sources: STATIN and NCBCM Research)

• Panama achieved a record in accumulated exports as of the first quarter of 2024 (Q1 2024), with approximately $1.2Bn according to Francisco Mola Ortega, vice minister of Foreign Trade of the Ministry of Commerce and Industries (Mici).
• Without copper, Q1 2024 exports grew by 13% compared to Q1 2023. The vice minister mentioned that Panama offers seafood, meat, cardboard, packaging, and coffee. New exports include glass cleaners and degreasers.
• Data up to last February indicate that Panamanian goods exports amounted to $170.3Mn, of which $122.4Mn correspond to exports registered by the agricultural, agro-industrial, industrial and fishing sectors and $47.9Mn to value-added exports from special regimes, being the second highest value recorded since 2010.
• The performance in January and February reflected an increase of more than 9%, compared to the same period of 2023. Accumulated data suggest that the main destinations of Panamanian exports were the Netherlands, Taiwan, and the United States.
• As exports continue to grow, Panamanian companies are also looking for new markets, especially the European bloc and the Caribbean. “The Caribbean, for example, is a natural market for us and there are great possibilities for our companies in the industrial, agro-industrial, fishing and agricultural sectors...” said Eric Dormoi, National Director of Export Promotion at Mici.

(Source: Newsroom Panama)

• A National Insurance Board of the Bahamas (NIB) executive revealed that NIB’s deficit this year would shrink by $27Mn due to the forthcoming rate increase set to take effect on July 1.
• The increases scheduled for July 1, 2024, will raise employer and employee contributions by 0.75 percentage points each. The employer contribution will climb to 6.65% from the existing 5.9%, while that for employees will increase from 3.9% to 4.65%.
• The contribution rates for self-employed and voluntarily insured individuals will also rise from the current 8.8% and 5%, respectively, to 10.3% and 6.5%.
• This adjustment forms part of a strategy to ensure the long-term survival of The Bahamas’ national social security system, meeting its benefit obligations to all citizens and legitimate persons who qualify for assistance.
• Dr Francis noted that, currently, NIB holds $1.4Bn in reserves. She highlighted that these reserves were pivotal during events such as Hurricane Dorian and the pandemic, enabling NIB to provide significant assistance during 2019 and 2020.
• Overall, the increase in NIB rates will have the effect of ensuring the medium-term viability of the social programs, thereby providing some level of relief to the Bahamian government by reducing the likely levels of expenditure which would have been spent if the NIB’s reserves were to exhaust in 2028 as previously predicted.

(Sources: Eyewitness News & NCBCM Research)

• Oil edged down on Tuesday after Israel-Hamas ceasefire talks in Cairo helped quell market fears of an expanding conflict in the Middle East, while worries about the outlook for U.S. interest rates dragged on the market.
• Brent crude futures dipped 19 cents, or 0.21%, to $88.21 a barrel, while U.S. West Texas Intermediate (WTI) crude futures slipped 20 cents, or 0.24%, to $82.43 a barrel.
• "The ongoing negotiation for a potential ceasefire between Israel and Hamas has led market participants to further unwind the geopolitical risk premium in oil prices, while the upcoming Fed meeting also drives some near-term reservations," said Yeap Jun Rong, market strategist at IG.
• Hamas negotiators left Cairo late on Monday to consult with the group's leadership after talks with Qatari and Egyptian mediators on a response to a phased truce proposal that Israel presented on the weekend.
• The delegation was expected to report back within two days, two Egyptian security sources said.

 (Source: Reuters)

• Energy ministers from the Group of Seven (G7) major democracies reached a deal to shut down their coal-fired power plants in the first half of the 2030s, in a significant step towards the transition away from fossil fuels. On Tuesday the ministers will issue a final communique detailing the G7 commitments to decarbonise their economies.
• Gilberto Pichetto Fratin, Chairman of the G7 ministerial meeting in Turin, said the ministers were also pondering potential restrictions to Russian imports of liquefied natural gas to Europe which the European Commission is due to propose in the short-term.
• The agreement on coal marks a significant step in the direction indicated last year by the COP28 United Nations climate summit to phase out fossil fuels, of which coal is the most polluting.
• Italy last year produced 4.7% of its total electricity through a handful of coal-fired stations. Rome currently plans to turn off its plants by 2025, except on the island of Sardinia where the deadline is 2028. Germany and Japan coal has a bigger role, with the share of electricity produced by the fuel higher than 25% of the total last year.
• Last year under Japan's presidency, the G7 pledged to prioritise concrete steps towards phasing out coal power generation, falling short of indicating a specific deadline.
• Nuclear energy and biofuels are two other issues at the top of Italy's agenda for the meeting, and Pichetto said both would be mentioned in the final communique among options G7 nations can pick to decarbonise power generation and transports.
• On Tuesday the G7 bloc could also indicate the need for a six-fold increase in battery capacity - critical to store renewable energy, which is intermittent - by 2030 from 2022 levels, one source said.

(Source: Reuters)

• Clarendon based alumina production company, Jamalco, says it has earmarked millions of dollars for some capital work at the plant. Jamalco's Managing Director Marvin Jackson says the investment will aid the company in increasing production back to the levels seen before the August 2021 fire.

• "We're back almost to where we were before the fire; we have been at that level for the past month. Last month we were on plan. The plan is to get another boiler into service as of the end of July this year and we are also purchasing a new turbine for the refinery powerhouse. That is a value of US$40 million and that will go a far way in getting us back to where we were and getting the stability at the refinery," he outlined.

• Jackson said there is also optimism about the global demand for bauxite by-products. "The prices on the market have been going up, so that is reflecting in a positive light for us and our owners, Century Aluminum and the government of Jamaica, through CAP (Clarendon Alumina Production Limited), so...for now it has a positive outlook for the rest of the year."

• In May last year, US based Century Aluminum Company bought the 55% stake in Jamalco, which was previously held by the Noble Group. The government-owned Clarendon Alumina Production holds the remaining 45% in Jamalco.

• These developments bode well for alumina production. Given Jamaica’s main exports are crude bauxite and alumina, the anticipated growth in these subsectors should continue to contribute to the mining and quarrying sector’s export revenues and overall value added from the sector.

(Sources: RJR News and NCBCM Research)

• Jamaica’s Minister of Agriculture, Fisheries, and Mining, Floyd Green, revealed promising insights during Wednesday’s post-Cabinet press briefing at Jamaica House. According to preliminary data, the agricultural sector experienced remarkable growth, surpassing a notable 10% mark in the first quarter of 2024.

• Green commended the diligence and commitment of farmers, attributing the sector’s success to their unwavering efforts. “However, amidst this achievement, he emphasised the pressing need to address the challenges posed by an ongoing drought cycle, significantly impacting agricultural operations across the nation.

• Highlighting the proactive measures taken by the Rural Agricultural Development Authority (RADA), Green informed that teams are actively engaged in assessing the drought’s repercussions on produce, particularly focusing on vegetables.

• Extended periods of drought typically exert severe strain on vegetable cultivation, especially affecting leafy greens. In response to the looming threat of crop losses, Green outlined the government’s concerted efforts in drought mitigation. The primary objective is to minimise losses and support farmers in safeguarding their crops against adverse environmental conditions.

• Despite these efforts, Green acknowledged the likelihood of some fallout but remained optimistic about mitigating the impact through proactive measures. Green highlighted collaborative initiatives, including meetings with greenhouse clusters, aimed at bolstering vegetable production to maintain consistent supplies amidst the challenges posed by the drought.

• In addition to these initiatives, there is a need for more investments from the Government to enhance the island’s water storage infrastructure as a more sustainable solution to the trucking of water to drought-affected communities. There is also significant room for the investment in and promotion of climate-smart farming practices, among local farmers to protect local agricultural production, inflation, and overall economic activity from the vagaries of climate change.

(Sources: Caribbean News Weekly and NCBCM Research)