• Investors are flocking to U.S. medium-term government bond funds and helping push their assets to record highs as uncertainty about the Federal Reserve's policy path prompts them to seek the sweet spot between income and protection.
• According to Morningstar Direct data, U.S. medium-term government bond funds, which include Treasuries and debt issued by government-linked agencies, attracted $9.8Bn in the first two months of this year. That compared with just $2.3Bn for long-term government funds and an outflow of $3.5Bn from short-term government bond funds.
• Assets under management (AUM) at U.S. medium-term government bond funds stood at a record $252Bn at the end of February, up 2% this year, the data showed. By contrast, the AUM at U.S. short-term and long-term government bonds had dropped 3.8% and 2.7% to $93.4Bn and $158.3Bn, respectively.
• The rush into medium tenors has been driven by shifting expectations for Fed policy. In early 2023, as the Fed's swift policy tightening caused the yield curve to invert, investors sought short-term bonds for their yields. Bond prices move inversely with yields. So, as talk of rate cuts grew in the second half of last year, investors flocked to long term bonds whose yields would tend to fall more, hence boosting their prices and yielding capital gains.
• The scenario has changed again this year. As the Fed contemplates cutting rates but inflation remains sticky, markets have gone from pricing six rate cuts in 2024 at the end of December to now expecting just three rate cuts - reshaping investor strategies in the bond market once more.
• "Some of this uncertainty in the rate path could be a driver of moving towards the middle of the curve, as investors want to have duration exposure but don’t feel confident enough in the Fed path to be long on the yield curve," said Michael Parnell, senior strategic research analyst at Verus.
• "Medium-term bond funds could continue to attract more flows over the next few quarters as they present a nice income opportunity and an appealing risk and reward profile for price action relative to duration, culminating in an attractive total return opportunity," said Karen Manna, portfolio manager at Federated Hermes.

(Source: Reuters)

• Britain's economy is moving in the right direction for the Bank of England to start cutting interest rates, Governor Andrew Bailey said on Thursday as two of his colleagues dropped their votes for a rate hike.
• The BoE's committee of interest rate-setters voted 8-1 to keep borrowing costs at their 16-year high of 5.25% as the two officials who had previously called for higher rates changed their stance.
• British government bonds rallied immediately after the announcement, and the sterling fell against the dollar and the euro.
• Investors slightly increased their bets on interest rate cuts through 2024, with a 76% chance of a first cut in June and a reduction of 75 basis points now fully priced in by December. Bailey said there had been "further encouraging signs that inflation is coming down" but he also said the BoE needed more certainty that price pressures were fully under control.
• "We're not yet at the point where we can cut interest rates, but things are moving in the right direction," he said in a statement. The BoE decision follows the U.S. Federal Reserve's announcement on Wednesday that it remained on track for three interest rate cuts this year, prompting stock market rallies.
• The European Central Bank has tried to cool talk about a run of rate cuts for the eurozone as investors increasingly consider the fight against global inflation to have been won.

(Source: Reuters)

• Tourism Minister, Hon. Edmund Bartlett, says the generation of ideas is key to driving continuous changes that facilitate the constant emergence of innovations in the local hospitality industry.
• Speaking during the Jamaica Centre for Tourism Innovation (JCTI) Career Expo 2024 at the Montego Bay Convention Centre in Rose Hall, St. James, on March 15, Barlett noted that ideas are what drive tourism; changes lead to growth, and where there is innovation, there is value added.
• The number of tourists traversing countries globally over the next 25 years is projected to increase by 1.5Bn. Against this background, Minister Bartlett said the industry will require innovative thinkers to continually add value to the wide-ranging outputs.
• Mr. Bartlett, who highlighted the “endless opportunities” that Jamaica’s tourism industry can potentially provide, pointed out that, the value-added component accounted for 11.0% of the sector’s 2.9% growth recorded last year. He expressed his excitement about the prospects enabling the Jamaican economy to see the benefit of US$5Bn in earnings by 2025.

(Source: JIS)

• JBG has announced that it has entered into an agreement to sell its hatchery assets located in Iowa, USA for US$23 million.
• These assets were previously purchased in March 2016 from Welp Inc. and were held through the Company’s subsidiary, International Poultry Breeders Hatcheries, Inc.
• The transaction is part of the company’s strategy to consolidate its assets and to increase the efficiency of JBG’s vertical integration in the United States.
• JBG’s US Operations reported segment profits of $2.98Bn for Q3 2023 which was 8.2% (or $226Mn) above last year’s segment result. This increase was driven by increased volumes of poultry meat and eggs, as well as the implementation of cost management initiatives.

(Sources: JSE & Company Financials)

• The Barbados-based Caribbean Development Bank (CDB) said it is now actively mobilising financing to continue its Special Development Fund (SDF), regarded as an integral element of its poverty reduction and sustainable development efforts.
• The region's premier financial institution said that currently near the end of its tenth four-year cycle, the SDF has disbursed over US$2.1Bn in development financing during its current phase, driving significant progress in regional economies. To sustain its impact beyond the present cycle, the CDB is undertaking a replenishment exercise, aiming to increase contributions from existing donors and enlist new contributors.
• The SDF, as the largest pool of concessionary funds from the Caribbean Development Bank, remains crucial in addressing poverty and human development challenges throughout the Caribbean region
• The CDB said SDF initiatives focus on enhancing the lives of the population of its borrowing member countries (BMCs). It said from 2013 to 2022, the SDF trained about 8,850 teachers, built over 2,760 classrooms, and improved learning for around 343,400 students. The fund also financed training initiatives for nearly 11,160 stakeholders in agriculture, boosting productivity. Projects impacting roads, transportation, water, and sanitation have benefitted over one million citizens in the region.
• The CDB noted that key sectors that have benefitted from investments and interventions include education, climate change, capacity building in government and national institutions, poverty reduction, water security, economic infrastructure and connectivity. 'Yet, despite this progress, Caribbean economies remain vulnerable to external forces, with persistent inequalities and pockets of poverty.
• With its mandate focused on poverty reduction, an adequately financed SDF will continue playing a vital role in addressing the region's key development challenges,' the CDB added.

 (Source: Trinidad Express Newspaper)

• The U.S. Congress on Tuesday laboured against a tight deadline to write a massive bill, funding military, homeland security and a range of other government programs following a deal reached by congressional leaders and the White House. Failure to act by midnight Friday would mean that many federal offices will be ordered to begin shutting down some operations.
• The package was expected to cover about three-quarters of the $1.66 trillion in discretionary government spending for the fiscal year ending Sept. 30. The last sticking point in closed-door negotiations was funding for the Department of Homeland Security, as a surge in migrants at the U.S.-Mexico border has become a significant issue in the election rematch between Democratic President Joe Biden and his Republican predecessor Donald Trump.
• It was unclear whether a fifth stop-gap funding bill since September might be sought to keep federal agencies operating seamlessly until the large bill can be enacted into law. President Biden promptly welcomed the deal, posting on X: "The House and Senate are now working to finalise a package that can quickly be brought to the floor, and I will sign it immediately."
• In addition to Homeland Security and the Pentagon, the bill would fund the State Department and other agencies, including the Treasury Department's Internal Revenue Service as it prepares for its April 15 taxpayer filing deadline. Earlier this month, Congress funded several other agencies, including the Agriculture, Transportation, Justice and Interior Departments.
• However, more fights lie ahead as the nation's $34.5 trillion national debt grows. Biden and House Republicans earlier this month laid out proposed budgets for the next fiscal year, which begins in October, which offered sharply contrasting priorities.

(Source: Reuters)

• Canada's inflation rate surprisingly cooled in February to its slowest pace since June 2023, and the closely-watched core inflation measures eased to more than two-year lows, data showed on Tuesday. This prompted investors to increase their bets on a June rate cut.
• Money markets increased their bets for a first 25 basis point rate cut in June to more than 75%, from 50% before the inflation data. The bets for an April rate cut increased to over 28% from 18% before the numbers were released.
• Annual headline inflation cooled to 2.8% last month, beating analyst expectations for a 3.1% rise and below a 2.9% increase in January. During the month, the consumer price index rose by 0.3%, less than a forecast 0.6% rise.
• Canadians in February benefited from softer price growth in food purchased from stores and a drop in cellular plans and internet services prices, which were the main contributors. The rise in grocery prices eased to 2.4%, slower than the headline inflation rate for the first time since October 2021. Offsetting the inflation deceleration in February was a year-over-year increase in gasoline prices, which rose 0.8% in February after a 4% decline in January, Statscan said.
• The Bank of Canada's (BoC) preferred measures of core inflation edged down to their lowest levels in more than two years. CPI-median slowed to 3.1% from 3.3% in January, while CPI-trim decreased to 3.2% from 3.3%. In January, the central bank projected headline inflation to remain around 3% in the first half of 2024, before cooling to 2.5% by the end of the year. It will update its forecasts next month. The BoC’s next rate announcement is on April 10.

(Source: Reuters)

• The average price paid for goods and services by Jamaican consumers fell in February 2024, as reflected in a 0.6% reduction in the All-Jamaica Consumer Price Index (CPI). The downward movement in the index for the ‘Food and Non-Alcoholic Beverages’ division (1.1%), was a result of lower prices for some agricultural produce such as cabbage, carrot, escallion, tomato, sweet potato, and yam.
• Also contributing to the decline in the February 2024 CPI was a fall of 1.6% in the index for the ‘Housing, Water, Electricity, Gas and Other Fuels’ division due to lower electricity rates, which resulted in a 4.7% fall in the index for the group ‘Electricity, Gas and Other Fuels’.
• However, the overall decline in the CPI for February was tempered by an increase of 0.3% in the index for the ‘Transport’ division. The largest contributor to the increase in the division’s index was the group ‘Operation of Personal Transport Equipment’, which had an upward movement of 1.1% due mainly to higher petrol prices.
• With the favourable movements in February, point-to-point inflation rate (February 2023 – February 2024) was 6.2%, down from 7.4% in January. Fiscal year-to-date inflation rate was 6.6%, while the calendar year-to-February inflation was -0.7%.
• Despite the easing of price pressures in February, the BOJ’s Monetary Policy Committee is likely to maintain the central bank’s policy rate at 7.00% when it meets on March 28^th, as it continues to monitor the pass through effects of previous rate adjustments.
• On a positive note, so far this month local produce prices have continued to decline, on the back of improved supplies. However, there are risks that inflation could trend upward in subsequent months, given the anticipated PPV fare increase in April, as well as an increase in international commodity prices and shipping costs, which have already started to increase this month.

(Sources: STATIN & NCBCM Research)

• Jamaica is on track to achieve a 72.0% debt-to-gross domestic product (GDP) ratio by the end of the fiscal year, the lowest in 30 years. Minister of Finance and the Public Service, Dr. the Hon. Nigel Clarke, disclosed while opening the 2024/2025 Budget Debate in the House of Representatives on Tuesday (March 12),
• He noted that the country’s debt could be as low as 64.0% of GDP by the end of April 2025, the lowest debt since 1976. He highlighted that Jamaica is enjoying 10 consecutive quarters of economic growth.
• In addition to noting that the country’s fiscal credibility has “improved dramatically”, Dr. Clarke said it has resulted in trust in Jamaica’s economic policymaking environment multiplying several folds and making the country “much more attractive to investment”.
• Citing the record-low unemployment rate of 4.2%, the Minister said the Government wants to create higher-value jobs by improving skills and boosting the educational outcomes of the population.

 (Source: JIS)

• Exxonmobil Guyana on Friday (March 15, 2024) announced that it has made an oil discovery at the Bluefin well in the Stabroek Block offshore Guyana. This marks the company’s first discovery of 2024 and signals its continued progress in tapping into Guyana’s vast oil and gas potential.
• The Bluefin well, drilled by the Stena Drillmax drillship in 4,244 feet (1,294 metres) of water, encountered approximately 197 feet (60 metres) of hydrocarbon-bearing sandstone. Situated about 8.5 kilometres southeast of the Sailfin-1 well, in the southeastern region of the Stabroek block, this discovery further bolsters ExxonMobil’s extensive exploration efforts in the area.
• The Bluefin discovery adds to the impressive tally of more than 30 discoveries already made on the Stabroek block since 2015, underlining the area’s rich oil potential. Notably, the Bluefin-1 exploration well is strategically located close to the Suriname border and lies six miles southwest of the Haimara-1 discovery, currently undergoing appraisal for potential gas development.
• This latest discovery reaffirms Guyana’s position as a key player in the global energy landscape and underscores ExxonMobil’s commitment to sustainable resource development in the region.
• The year-end goal is to reach a total cumulative output of 500 million barrels, marking a major milestone for Guyana since the start-up in the Stabroek Block five years ago.

 (Source: Guyana Chronicle)