• In a July 11, 2025 research article by Fitch BMI, there are two risks that could result in an increase in volatility. First, is the escalation in trade tensions as the US administration raises the tariff rate for certain economies. Secondly, the US administration is increasing pressure on Federal Reserve Chair Jerome Powell, which could make markets uneasy.
• Regarding trade tensions, while the extension of the July 9 deadline to August 1 provides more time for negotiations, U.S. President Donald Trump has simultaneously raised tariff rates for several economies, leading to greater uncertainty. Trump might feel emboldened to raise tariffs given that inflation has thus far remained well anchored, the labour market is holding steady, and equity markets hit new highs. However, it is believed that such a strategy would pose significant downside risks to US and global growth.
• Companies may start to see higher inventory costs as their front-loaded inventory is depleted, and they start to rebuild inventory at higher costs.  This could feed into higher prices if they pass on the additional cost, or higher unemployment if they are unable to do so, and this could mean tighter margins. Additionally, markets do not seem to be pricing in a significant escalation in tensions, which could lead to another sharp rise in equity and bond market volatility. Notably, compared with April, the economy is in a weaker position to absorb another shock.
• Meanwhile, the U.S. administration is also increasing pressure on Federal Reserve Chair Jerome Powell, which could make markets uneasy. The Financial Times reported that the White House has accused Jerome Powell of 'grossly’ mismanaging the refurbishment of the Federal Reserve’s headquarters, and has come under attack from various Republican members of Congress.
• If the market interprets this as a potential avenue for the administration to relieve Powell of his duties, or if this results in the decision by Powell to step down, this could lead to a significant rise in financial market volatility. For now, it is believed that Powell will remain as Chair until his term ends in May 2026, and betting markets only assign a 12% probability that he is removed from his post, but any risk to this could lead to economic uncertainty and a rise in financial market volatility.

(Source: Fitch Connect)

• Chief Executive Officer and Technical Director of the Caribbean Community (CARICOM) Private Sector Organisation (CPSO), Dr. Patrick Antoine, has proposed addressing trade inefficiencies as a key strategy to mitigate the potential impact of the impending 10.0% baseline tariff on regional exports to the United States (US).
• Speaking during a Business Breakfast Forum in Montego Bay on Tuesday (July 8), Dr. Antoine noted that CARICOM is facing a potential fallout of approximately US$542.3Mn per annum consequent on the proposed implementation of the baseline tariff, according to a CPSO study conducted across Caribbean nations.
• “There are instances where our inefficiency from trade facilitation, inefficiency at ports, et cetera, account for nearly 10.0% of the export value of some of our products in some of the countries. So again, if we were to drive down the inefficiencies, we could, in fact, overcompensate for the loss,” he opined.
• Antoine noted that by addressing trade inefficiencies, the Caribbean could unlock substantial cost savings across key sectors. “So, all we’re saying in the context of all of this is to look at logistics and connectivity. We need to look at the impact on the negotiations that we have, because about 70.0% of the goods that we export are not consumed in the community,” the CPSO Head maintained.
• CPSO Chairman, Gervase Warner, supported Dr. Antoine’s position, stressing that CARICOM member states must prioritise export market diversification. Mr. Warner emphasised that CARICOM nations must look beyond short-term relief from US trade policies and actively pursue strategic partnerships that strengthen the region’s long-term economic resilience and global competitiveness.

(Source: JIS)

• The Government has welcomed the European Parliament’s endorsement of the European Commission’s recommendation to delist Jamaica and Barbados from the European Union (EU) roster of high-risk third countries for anti-money laundering and counter-terrorism financing (AML/CFT).
• The decision, on Wednesday (July 9), followed concerns raised by Jamaica’s Prime Minister, Dr. the Most Hon. Andrew Holness, and Prime Minister of Barbados, Hon. Mia Mottley, regarding delays in removing both countries from the list.
• In their addresses during the just-concluded 49th Regular Meeting of the Conference of Heads of Government of the Caribbean Community (CARICOM) in Montego Bay, both leaders noted that Jamaica and Barbados remained on the EU’s high-risk list due to procedural technicalities within the European Parliament.
• In a communiqué following the CARICOM Meeting, the European Parliament noted that in its vote on Wednesday (July 9), it decided to “not object to the Commission’s proposal on updating the EU list of high-risk third countries and territories with deficiencies in their regime on fighting money-laundering and terrorist financing, as none of the resolutions on objection secured majority support”. As a result, Jamaica, Barbados, Gibraltar, Panama, the Philippines, Senegal, Uganda, and the United Arab Emirates were officially removed from the EU list.
• Reacting to the update on his official social media platforms, Prime Minister Holness described the development as a significant step forward for Jamaica and Barbados, as well as the wider CARICOM region.

(Source: JIS)

• Barbados is set to become the first nation to use a new standardised debt swap facility aimed at helping multiple countries use money for development projects instead of high-interest loan payments.
• Dubbed a "debt-for-resilience" facility, the multi-billion-dollar set-up is backed by four major development banks and is expected to see two or three more countries in the Caribbean region, where it is focused, sign up by year-end. Barbados is on course to be the test case later this year for what is expected to be the facility's formal launch at the U.N. COP30 climate summit in Brazil in November, its Finance Minister, Ryan Straughn, highlighted.
• Straughn said several other Caribbean countries - which he did not name - had also agreed in principle to undertake swaps of their own as well. Under the programme, countries would buy back portions of their most expensive government bonds from the open market. They then cancel them and issue new ones with a significantly lower interest rate, thanks to the development banks' credit guarantees that effectively reduce the risk for bond buyers.
• Debt swaps have become increasingly popular in recent years as a way for developing countries to replace expensive government debt with cheaper bonds and use the savings on projects such as environmental conservation, schools, or infrastructure.
• But the new debt-for-resilience mechanism is a leap forward as it largely standardises many of the legal and transactional complexities that have meant some recent swaps have taken years to execute and produced relatively modest debt savings. Barbados will have to say what it will spend the money on beforehand, but the resilience tag gives it wide scope on what the projects can be.

(Source: Reuters)

• The Dominican Republic welcomed 6,145,008 visitors during the first six months of 2025—its highest tourism figure in history. This represents an increase of nearly 2 million visitors compared to the same period in 2019 and over 185,000 more than last year.
• President Luis Abinader and Tourism Minister David Collado announced the record-breaking figures at an event in Santo Domingo, emphasising the sector’s vital role in the national economy. President Abinader noted that the country’s tourism boom, driven by strong public-private collaboration, makes this the ideal time to invest in the sector.
• Minister Collado highlighted that the January–June total includes 4.5 million air travellers and a historic 1.63 million cruise passengers. He reported a 48% increase over 2019, 15% over 2023, and 3% over 2024.
• The majority of visitors came from the United States (45%), Canada (18%), Argentina (6%), and Colombia (4%). The busiest airports were Punta Cana, Las Américas, and Cibao. Hotel occupancy during this period surpassed 77%.
• Collado projected that, at this pace, the country could reach 12 million visitors by year’s end, marking an unprecedented peak for Dominican tourism.

(Source: Dominican Today)

• Due to the inelasticity of demand for copper, a tariff on copper is anticipated to push up United States (U.S.) domestic prices. The tax would be paid by American consumers rather than foreign producers. Indeed, domestic U.S. copper prices have significantly diverged from prices elsewhere since President Donald Trump first announced threatened tariffs in March. Copper traded in New York Stock Exchange jumped by over 10% on July 8, 2025.
• With copper being a key input in the manufacturing sector, this will increase the price of U.S.-made manufactured goods and reduce U.S. firms’ competitiveness compared to Chinese or European rivals, particularly in the automotive and electronics industries, where copper usage is most intensive.
• Counterintuitively, implementing a tariff could potentially harm the U.S. copper refining industry, as a widening gap between U.S. and global copper prices may incentivise foreign exporters to redirect finished copper products to the U.S. market, increasing competition and undermining domestic refiners.
• Fitch expects that the measures will likely deter U.S. copper exports, valued at approximately US$12.2Bn in 2024. However, the tariffs are unlikely to significantly impact copper producers that do not export to the U.S., with Chile being a notable exception. The primary concern for exporters is a potential decline in U.S. copper consumption, which Fitch considers unlikely. Additionally, producers whose export prices are linked to U.S. copper prices could potentially benefit from higher prices resulting from reduced U.S. imports.
• Nevertheless, Fitch views the tariff threat primarily as a bargaining tactic rather than a genuine policy proposal. The U.S. is actively engaged in negotiating numerous trade agreements with various economies, and this recent proposal may be an attempt to leverage concessions on unrelated issues. Since the 50% tariff threat was conveyed verbally and lacked official backing, the final implementation will likely be less severe, potentially reduced in scope over the coming weeks. Most investors have anticipated that any U.S. tariffs on copper would be closer to 25%, indicating a market expectation of a more moderate approach.

(Source: Fitch Connect)

• As summer travel ramps up, new data and airline insights suggest a clear shift in where Canadians are choosing to go, citing an increase in destinations other than the U.S.
• Airlines have adjusted their networks to match the trend, while Toronto Pearson International Airport braces for one of its busiest seasons on record as more travellers head to Europe and domestic destinations. “Our summer travel is now in full swing at Toronto Pearson,” said Sean Davidson, spokesperson for the airport. “We normally see demand for European destinations soar in the summer, and that’s true again this year.”
• While Davidson emphasised that airlines are ultimately responsible for scheduling and routing decisions, carriers are responding to demand. In a statement to Global News, WestJet confirmed it had reduced some Canada-U.S. routes. Instead, the airline is boosting service within Canada, Europe, and to sun destinations.
• Other companies, such as Porter Airlines and Air Canada, have also made travel and capacity shifts. Air Canada launched new routes to Prague and is offering flights from Toronto to Rio de Janeiro, Cartagena, and Guadalajara.
• The shift toward Europe and domestic travel appears to be part of a larger rethinking of how travellers are choosing where to go. While the United States remains a key market, data is pointing to how its cultural and political volatility may be causing some travellers to look elsewhere. With airlines adapting their networks and millions of passengers moving through airports like Pearson, one thing is clear: travellers are broadening their horizons.

(Source: Global News)

• For many countries, the reprieve from President Donald Trump’s eye-watering tariffs, which were implemented on April 2, 2025, and temporarily reduced to 10% a week later, is soon set to come to an end. The 90-day pause, during which the Trump Administration pledged to negotiate deals with trading partners, was set to expire on Wednesday, July 9, but the White House confirmed on Monday, July 7^th, that it would push back the start of hiked tariffs to August 1^st.
• Trump also began sharing “letters” to multiple heads of state on Truth Social, alerting them of the tariff rates their countries will face next month if they do not reach deals before then. While Trump’s trade adviser Peter Navarro said in April that the Administration would deliver “90 deals in 90 days,” officials lowered expectations in recent days. Treasury Secretary Scott Bessent and Commerce Secretary Howard Lutnick recently said they expected about 12 trade deals.
• Notably, Trump has so far reached three deals, with the U.K., China, and Vietnam, but on Monday sent out new tariff rates for more than a dozen countries (see Table 1). “Our relationship has been, unfortunately, far from Reciprocal,” Trump wrote in the letters, which followed a standardised format. “We invite you to participate in the extraordinary Economy of the United States,” he wrote, “but only with more balanced, and fair, TRADE.”
• Some analysts on Wall Street were optimistic that the return of uncertainty may not weigh as heavily on stocks this time around. “Our base case remains that the uncertainty around tariffs won’t be enough on its own to bring the US economy to a crashing halt,” analysts with Capital Economics research group and consultancy wrote in a note to clients. “If so, it’s unlikely to be enough to dampen investors’ enthusiasm for US equities.”
• Yet the analysts also acknowledged that renewed chaos could prove a setback for officials at the Federal Reserve, who continue to insist on keeping interest rates high, despite repeated demands from Trump for a rate cut. Rates have remained elevated in anticipation of worsening inflation from  the import taxes. It’s something that will continue to make it expensive for the federal government, not to mention consumers and businesses, to borrow money, the analysts said.

(Sources: Time & NBC News)

• The Canadian dollar edged higher against its U.S. counterpart on Tuesday, July 8, 2025, but was holding near an earlier eight-day low as the prospect of additional U.S. tariffs kept risk appetite in check.
• The loonie was trading 0.1% higher at 1.3675 per U.S. dollar, or 73.13 U.S. cents, after touching its weakest intraday level since June 30 at 1.3694. "There's a little bit of steam (coming) out of the loonie, primarily driven by risk aversion as these tariffs have basically come back to the forefront," said Rahim Madhavji, president at KnightsbridgeFX.com.
• U.S. President Donald Trump said he will announce a 50% tariff on imported copper on Tuesday, an effort to boost U.S. production of a metal critical to electric vehicles, military hardware, the power grid and many consumer goods. Canada is a major producer of copper and other commodities such as oil. The country has already been hit with hefty U.S. tariffs on autos, steel and aluminium, but has escaped sweeping U.S. duties imposed in April. Canadian Prime Minister Mark Carney and Trump have agreed to reach some form of a trade deal by July 21.
• Despite the looming concerns around the effects of tariffs on Canada’s economic growth, Canadian economic activity expanded in June at the fastest pace in four months, but price increases also accelerated, Ivey Purchasing Managers Index (PMI) data showed. The seasonally adjusted index rose to 53.3 last month from 48.9 in May, posting its highest level since February.

(Source: Reuters)

• Brazil plans to return to international debt markets later this year after successful issuances in the first half, Treasury Secretary Rogerio Ceron said in an interview last week, adding that a new sustainable bond is also under consideration.
• Latin America's largest economy raised $2.5Bn in dollar-denominated sovereign bonds in February and $2.75Bn in June. The last time Brazil conducted more than two sovereign bond sales abroad in a single year was in 2014.
• Ceron acknowledged investor concerns over the country's rising public debt but noted that similar trends are playing out across major economies. Amid a global reallocation of assets driven by shifts in U.S. economic policy, he said Brazil stands out due to its high share of local-currency debt and elevated real interest rates, an increasingly attractive combination as inflation eases.
• These factors, he said, have fueled strong capital inflows, reflected in a currency that has gained more than 10.0% this year, rising corporate bond issuances, more foreign participation in public debt markets and gains in local equities.
• "There's a significant interest rate differential and a macro environment that makes sharp currency depreciation unlikely, since capital is flowing in. So, it's almost a perfect window for non-resident investors to allocate funds here and benefit," Ceron said. With debt rollovers running at about 140.0% of maturities, well above the historical average around 100.0%, Brazil's Treasury has ramped up domestic issuance, mainly to capitalise on what Ceron called "a great moment" in the market, while also preparing for potential volatility ahead of the 2026 election.
• Of note, amid a dispute between the government and Congress over a decree raising the IOF^[1] tax levied on some financial transactions, the secretary defended the measure as essential to meeting next year's fiscal target. He also stressed the need for congressional approval of an executive measure to harmonize income tax rates on financial investments and impose a 5% levy on currently tax-exempt debt securities.

(Source: Reuters)

^[1] The Tax on Financial Operations (IOF), is a levy imposed on individuals and legal entities for various financial transactions conducted within Brazil. The IOF rate varies depending on the specific transaction, and its payment is mandatory.