• The Federal Reserve's latest financial stability report was good news for anyone worried that a record run of interest rate hikes might overstress the banking system or trigger a recession with companies and households pushed into default through a broad credit crackdown.
• Instead, the Fed is wrestling with an economy that has sloughed off tight monetary policy to such a degree that U.S. central bank officials are without a clear view of what to expect and are divided over issues like productivity, the economy's underlying potential, and even whether the current policy interest rate is as restrictive as imagined.
• New GDP figures released on Thursday highlighted the dilemma, with the economy growing just 1.6% over the first three months of the year, below expectations, and a marked slowdown from the 3.4% registered in the fourth quarter of 2023. It was the first reading below the Fed's 1.8% estimate of the economy's potential since the second quarter of 2022.
• Stubborn inflation figures are opposing the underwhelming GDP Q1 release, as measured by the personal consumption expenditures (PCE) price index, which came in at 3.4% in the first quarter, well above the Fed's 2% target.
• Across the economy, a wave of tight credit seems to have come and gone - bank lending is growing, corporate credit spreads are narrow, and household balance sheets are largely healthy. A recently updated Fed index of overall financial conditions showed there was virtually no impact on economic growth right now from the central bank's monetary policy or the broader credit conditions it is intended to influence.
• Contrary to Fed officials assessment that policy is restrictive, current credit conditions in the economy are "consistent with above-trend growth. That tells me that the transmission of monetary policy to the real economy in the U.S. has been much less effective" than elsewhere, said Joe Kalish, chief global macro strategist at Ned Davis Research.
• Fed officials themselves are unsettled on whether they still need the economy to slow for inflation to fall or whether the "immaculate" influence of productivity and other factors will do the job, an important issue since one view leans towards tighter policy and the other towards easing. The release of key inflation data on Friday is expected to show the Fed's preferred measure of price pressures remained well above the central bank's 2% target, a possible sign that progress has stalled.

(Source: Reuters)

• On April 2nd, consistent with the Government’s thrust to develop a robust and comprehensive market conduct and consumer protection framework for the financial sector, the Bank of Jamaica (BOJ) issued Automated Banking Machines (ABM) Service-Level Standards for deposit-taking institutions (DTIs).
• Senior Deputy Governor, BOJ, Dr. Wayne Robinson, says this market conduct and consumer protection framework will be established with the implementation of the Twin Peaks model of financial sector supervision. The Twin Peaks model, with a scheduled timeline for its legislation to reach Parliament by 2025, will see the responsibility for prudential supervision and regulation of DTIs being vested in the BOJ.
• However, the development and implementation of the Twin Peaks Model “will take time”, and given the urgent nature of the ABM problem(s) at hand, Mr. Robinson noted that “as a first step in developing this framework where we can provide adequate protection that addresses consumer needs, the Bank decided to begin to roll out these guidelines for ABM service-level Standards”.
• The ABM Standards address issues relating to the deployment of ABMs, accessibility and ease-of-use, availability of cash, ABM fees and charges, infrastructure maintenance and the management of disruptions, client safety and security, fraud minimisation, and financial education of ABM users.
• A statement issued by BOJ on the day the Standards were promulgated indicates that the DTIs have a nine-month transition period within which to bring themselves into conformity with all the new ABM guidelines. The BOJ deemed this timeline reasonable and a feasible window “for them to be in a position to start meeting the majority, if not all of the Standards”.
• Dr. Robinson noted that the DTIs have been “very supportive” of the Standards, noting that the Jamaica Bankers Association has indicated so publicly. “We have been seeing improvements, certainly compared to the experiences last year… and when you look at the data that was published, you will see those improvements. A number of banks have met the benchmark for the number of ABMs in operation and also met the benchmark, in terms of the uptime,” he adds.

(Source: JIS)

• Wigton Windfarm Limited (WIG) has announced the appointment of Mr. Gary Barrow and Miss Michelle Chin Lenn as the Chief Executive Officer and Deputy Chief Executive Officer, respectively, effective May 6, 2024.
• As a result of the reorganisation of the operations of Wigton, the position of Head of Energy, which was held by Miss Michelle Chin Lenn, will be removed.
• The Board of Directors of WIG is of the view that the aforementioned changes, and specifically the appointment of Mr. Gary Barrow following a successful recruitment process, will allow the Company to fully realise its vision of being a profitable, regional conglomerate with successful clean energy and other investments.  
• Mr. Barrow also takes the lead at an exciting time for WIG, leading the charge for new investments to deliver a more diversified energy portfolio and growth agenda.
• Furthermore, Mr. Barrow has demonstrated exceptional leadership for over thirty (30) years in highly relevant C-suite roles in telecommunications and electricity in the region.  In addition to his industry know-how and business experience, his multi-disciplinary background in Engineering, Finance, Technology, Innovation, Business Transformation, Process Re-Engineering, Governance and People Management will allow him to hit the ground running at WIG.

(Source: JSE)

• The Guyanese Government on Sunday announced the signing of a mineral agreement with Reunion Gold Corporation— a gold exploration and development company—headquartered in Toronto, Canada.
• This agreement signed between the company and the Guyana Geology and Mine Commission (GGMC), aims to establish stable fiscal and operating conditions for the Oko West gold project in Region Seven, which is owned entirely by the company’s Guyanese subsidiary.
• According to a statement from the Ministry of Natural Resources, key components of the mineral agreement, include royalty payable to the government for gold produced from the operations, as established under the fiscal regime for mineral agreements.
• “As part of the agreement, Reunion Gold commits to prioritising the employment of qualified Guyanese individuals and implementing a comprehensive training programme to develop additional skills necessary for Guyanese personnel at all operational levels,” it added.
• This approach, the ministry noted, aims to contribute to the sustainable development of the country by nurturing local talent. Additionally, the government said the company has pledged to establish a financial support programme for environmental and social projects.
• The company has allocated US$1Mn annually towards initiatives that promote environmental sustainability and address social needs within surrounding communities. The government said that this commitment will begin upon commercial production or within 24 months from the issuance of a mining license, whichever occurs first.
• The government has reaffirmed the shared commitment to sustainable mining practices, aimed at minimising environmental impacts, fostering positive community relationships, and creating lasting benefits for Guyana and its citizens.

(Source: Guyana Chronicle)

• Monday, the Inter-American Court on Human Rights opened its 166th Regular Session at the University of the West Indies at Cave Hill, Barbados, where it will be taking up the issue of the climate emergency, and the response in the framework of international human rights law.
• More than 60 delegations from around the globe, including experts on human rights and climate change and from academia and non-governmental organizations, are participating in the session, hosted by the government of Barbados. The Inter-American Court of Human Rights will hold a public hearing on a request for an advisory opinion on climate change and human rights.
• The request for an advisory opinion for clarification on the scope of governments’ obligations in responding to climate change was requested by Colombia and Chile. The countries noted that both are experiencing the daily challenge of dealing with a proliferation of droughts, floods, landslides and fires.
• Still, climate effects are not being felt uniformly leading to the effort to gather diverse opinions on governments’ obligations to their populations. A similar information-gathering effort is being carried out by the International Tribunal of the Sea and the International Court of Justice, said Pablo Saavedra Alessandri, registrar of the Inter-American Court of Human Rights.
• Overall, the hope is that the Inter-American Court of Human Rights will issue an advisory opinion that would guide the climate and energy policy of many countries in Latin America and the Caribbean.
• In an amicus brief submitted last year, Earthjustice urged the court to outline specific obligations for governments to mitigate climate change, including phasing out fossil fuel production and promoting a just transition to clean and renewable energy.

(Source: Miami Herald)

• Rising food prices around the world may finally be seeing a bottom this year. According to Oxford Economics, global food prices are expected to decline in 2024, offering some relief for shoppers. “Our baseline forecast is for world food commodity prices to register an annual decline this year, reducing pressure on food retail prices further downstream,” the economic advisory firm wrote in a recent note.
• The key driving force behind the decline in food commodity prices is the “abundant supply” for many important crops, especially wheat and maize.
• Bumper harvests in recent months for both staple crops led to a steady decline in prices. Wheat futures have also fallen almost 10% year-to-date, while maize futures lost about 6% over the same period, according to FactSet data.
• Farmers ramped up production of both wheat and corn grains following higher prices after Russia began its invasion of Ukraine in 2022. As a result, global maize harvests for the marketing year ending August this year are likely to come in at record levels, according to Oxford’s analysis. Wheat harvests are also forecast to come in high, although slightly lower than the record level in marketing year 2022 to 2023, the Oxford report said.
• Supply pressures of grains in Russia and Ukraine have also eased. Despite the collapse of the Black Sea Grain initiative in July last year, Ukrainian agricultural exports have been holding up well, Oxford Economics’ Lead Economist Kiran Ahmed wrote. Russian wheat exports have also been flooding international markets, keeping prices low, he added.

(Source: CNBC)

• U.S. business activity cooled in April to a four-month low, due to weaker demand, while rates of inflation eased slightly even as input prices rose sharply, suggesting some possible relief ahead as the Federal Reserve looks for signs that the economy is ebbing enough to bring inflation down further.
• S&P Global said on Tuesday that its flash U.S. Composite PMI Output Index, which tracks the manufacturing and services sectors, fell to 50.9 this month from 52.1 in March. A reading above 50 indicates expansion in the private sector.
• The slowdown reflected weaker rates of growth in both the manufacturing and services sectors, with activity easing to three- and five-month lows, respectively. That in turn meant employment, which the Fed is watching closely for indications of a drop off, fell for the first time since June 2020, with the reduction focused on services.
• The survey suggested that the economy lost momentum at the beginning of the second quarter compared to the January-March quarter. According to a Reuters survey of economists, GDP likely increased at a 2.4% annualized rate last quarter.
• The S&P Global survey's measure of new orders received by private businesses dropped to 48.4 from 51.7 in March, the first decline in six months, while its measure of prices paid for inputs declined to 56.5, off the six-month high of 58.7 reached in March, but still a solid rate. The output prices gauge fell to 54.1, off the ten-month high of 56.4 recorded in March, but also still elevated.
• In a reversal of trends seen last year, when wage-related services sector price pressures intensified while manufacturing input costs cooled, higher raw material and fuel prices resulted in the fastest rise in manufacturing input costs in a year in April, with manufacturing now recording steeper inflation increases in three of the past four months. Service providers, by contrast, reported the second-lowest overall cost increase in three and half years.
• Manufacturing entered contraction territory, with the survey's flash manufacturing PMI slipping to 49.9 this month from 51.9 in March. New orders shrank slightly while growth in employment slowed, albeit modestly, and supply chains showed signs of spare capacity. The survey's flash services sector PMI dipped to 50.9 in April from 51.7 in the prior month.

(Source: Reuters)

• The Jamaica Agricultural Commodities Regulatory Authority (JACRA) will be seeking to facilitate an increase in the production of regulated agricultural commodities (RACs) by at least 20% in the 2024/25 fiscal year, according to the Jamaica Public Bodies Estimates of Revenues and Expenditure for FY 2024/25.
• The increased production is expected to fill supply gaps in the hospitality, food service and agro-processing industries.
• JACRA also aims to facilitate an increase in support systems for market access to regional and international markets. “This is expected to result in a 10% increase in the number of farmers who have access to these markets,” the document stated. The Authority will achieve these objectives by facilitating capacity-building activities for farmers, training and encouraging linkages between farmers and agro-processors.
• The Authority will also be promoting the utilisation of climate-smart technologies by Jamaican farmers, fishers, fish farmers, miners and entrepreneurs in the agriculture and minerals sector.
• JACRA was established for the development, regulation, promotion and standardisation of the agricultural commodities industry and for connected matters.
• Notably, given forecasts that the next 5 years are expected to bring the highest temperatures on record along with the vulnerability of the country’s agricultural production, and by extension inflation, to drought and climate change, the promotion of climate-smart agricultural practices by the authority is a step in the right direction.

(Sources: JIS and NCBCM Research)

• On April 17, 2024, Express Catering (ECL) celebrated the listing of its 8.5% US fixed rate senior unsecured bond at the Jamaica Stock Exchange. Through this bond offer, ECL raised US$12.2Mn, the largest bond offer by a company listed on the Junior Market. This was the first bond listing on the Junior Market for the year.
• Speaking at the listing, Dr. Marlene Street Forrest, Managing Director of the Jamaica Stock Exchange in her Welcome, congratulated the company on its achievements and its contribution to the growth of the capital market.
• “Let me congratulate ECL on the fact that out of the 515 account holders of the bond, 405 (78%) were shareholders, which speaks volume to the confidence that shareholders have placed in the company. This represents a significant measure of the company’s growth and sustainability as the company has the opportunity to tap into their shareholder base for additional funding when required,” she said.  
• She continued by stating that she was delighted that, the ratio of female to male is a little skewed towards the female with 51% female and 49% male participants in the bond offer. This she said signified a growth in female account holders and equity in investment in the market.
• According to Mr. Ian Dear, CEO of Express Catering Limited, “Tourism in Jamaica, which 98% of our customers are tourists coming through the Sangster International Airport, will continue to grow in Jamaica by all intents and purposes. The current trajectory of new hotel rooms and the interest in Jamaica as a destination bodes well for continued growth,” he said.
• He added that, “we are right now trending almost 10% above 2023 in our arrivals as a country and so we are very encouraged by what the future holds and ECL stands to benefit from that entire growth.”

(Source: JSE)

• Moody's has given the Bahamian Government’s fiscal consolidation campaign a major boost by predicting that this year’s fiscal deficit will only narrowly overshoot its target by $44Mn.
• The credit rating agency forecast that improved revenues and “spending restraint” will contain the deficit for the 2023-2024 fiscal year to a sum equivalent to just 1.2% of economic output of gross domestic product (GDP). (The Bahamas' fiscal year runs during the period of July 1 to June 30, each year)
• If Moody’s projection turns out to be accurate, the GFS (Government Finance Statistic) deficit will be only slightly higher than the $131Mn, or 0.9% of GDP, that the Davis administration targeted when unveiling its Budget last May. The rating agency’s latest deficit forecast, based on that Budget, is equal to $174.67Mn or a near $44Mn overshoot if it holds and comes true.
• Moody’s also shrugged off the fact that the Government’s fiscal deficit was almost double the full-year target halfway through the 2023-2024 Budget year.
• “According to data as of the first six months of the fiscal year 2023-2024, The Bahamas recorded a fiscal deficit equal to $258.7Mn or 1.9% of its GDP,” Moody’s said in its credit update. “Even though the deficit exceeded the target for the first six months of the fiscal year, there were signs of fiscal consolidation.”
• “We expect improvement in revenue collection and continued restraint on spending will allow the Government to come close to the annual target of 0.9% of GDP. We forecast a slightly larger deficit in fiscal 2024, 1.2% of GDP, reflecting moderate slippage vis-à-vis the Government’s fiscal targets,” Moody’s noted.
• The Davis administration will likely seize on Moody’s update as the first affirmation from an external source that it is close to achieving its projected fiscal targets, especially as the rating agency is forecasting it will achieve its long-cherished goal of moving from deficit to a Budget surplus equal to 0.5% of GDP (around $65.5Mn) in the upcoming 2024-2025 fiscal year.

(Sources: The Tribune & Moody’s Investor Services)