• U.S. job openings dropped to the lowest level in nearly 2-1/2 years in July as the labour market gradually slowed, bolstering expectations that the Federal Reserve will keep interest rates unchanged next month.
• The Job Openings and Labour Turnover Survey, or JOLTS report, from the Labour Department on Tuesday also showed the number of people quitting their jobs dropped to levels last seen in early 2021, indicating that Americans were becoming less confident in the labour market.
• That was reinforced by a survey from the Conference Board showing consumers' perceptions of the labour market cooled in August. Nevertheless, labour market conditions remain tight, with 1.51 job openings for every unemployed person in July, compared to 1.54 in June. While that was the lowest ratio since September 2021, it is well above the 1.0-1.2 range considered consistent with a jobs market that is not generating too much inflation. Layoffs are very low by historical standards.
• "Although the labour market is still tight, the degree of excess demand is declining and is coming about through companies reducing the number of vacancies rather than increasing layoffs and unemployment," said Conrad DeQuadros, senior economic advisor at Brean Capital in New York. "There is plenty here to make the case that not only is the labour market rebalancing but at this point it is doing so without pushing up unemployment." "With reports like this, the Fed can most likely keep rates unchanged in September," said Jeffrey Roach, chief economist at LPL Financial in Charlotte, North Carolina.

(Source: Reuters)

• U.S. regulators on Tuesday unveiled plans to force regional banks to issue debt and bolster their so-called living wills. This comes as steps meant to protect the public in the event of more failures.
• The steps are part of regulators’ response to the regional banking crisis that flared up in March, ultimately claiming three institutions and damaging the earnings power of many others. In July, the agencies released the first salvo of expected changes, a sweeping set of proposals meant to heighten capital requirements and standardize risk models for the industry.
• The requirements will create “moderately higher funding costs” for regional banks, the agencies acknowledged. That could add to the industry’s earnings pressure after all three major ratings agencies have downgraded the credit ratings of some lenders this year.
• All American banks with at least $100 billion in assets would be subject to the new requirements, which resemble rules that apply to the world’s biggest banks.
• Impacted lenders will have to maintain long-term debt levels equal to 3.5% of average total assets or 6% of risk-weighted assets, whichever is higher, according to a fact sheet released Tuesday.

(Source: CNBC)

• Director of Tourism, Jamaica Tourist Board, Donovan White, says Jamaica is experiencing a surge in business travel, which is on its way back to pre-COVID levels. He informed that the country’s meetings, incentives, conferences, and exhibitions (MICE) sector is on the rise.
• MICE tourism refers to business-related events that are planned, and professionals from the related sector are brought together in a hospitality setting.
• Speaking at the Caribbean Meeting and Incentive Travel Exchange (CMITE) Breakfast held at the Secrets Wild Orchid Resort in Montego Bay, St. James, on Tuesday (August 22), Mr. White noted that “business is back, and in-person events are once again being well attended”.
• The Director of Tourism pointed out that while MICE travel is not measured by percentages due to the varied sizes of the groups and the dynamic nature of meetings, tourism stakeholders have been reporting bookings for large groups, several months ahead of time. He further pointed out that stakeholders are beginning to see bookings six, twelve, and eighteen months ahead of large groups coming back to Jamaica, which is a good sign for forecasting the ability of arrivals
• The CMITE meetings, which were hosted by wellness brand Questex on the island, connect North American meeting planners and incentive buyers with leading Caribbean and Mexico-based suppliers to foster meaningful industry relationships. While noting that the island is pleased to have been chosen to host CMITE for the third time, Mr. White outlined that Jamaica has put in the work to ensure that it could once again host meetings of this nature.
• The objective of the CMITE series of meetings is to promote Jamaica as a warm-weather destination of choice with the personnel, infrastructure, and strong cultural appeal that will result in reservations for meeting and incentive groups.
• MICE makes up around 20% of Jamaica’s overall tourism product and as such, growth in this area will improve earnings in the sector and by extension, drive economic growth.
• The increase in business-related travel and events is a positive sign for Jamaica's tourism and economy. As this area makes up a large part of the country's tourism income, its growth will lead to more earnings, helping to boost the economy overall.

(Source: JIS News)

• Fitch Solutions forecasts that Peru’s current account deficit will narrow from 4.1% of GDP in 2022 to 2.1% in 2023, a downward revision of its previous figure of 2.5%, as slower import growth is offset by still robust copper exports.
• A stronger-than-expected slowdown in growth in May and June 2023 weighed on employment and private consumption, lowering import demand. Fitch has already seen a significant slowdown in imports since its last report.
• Meanwhile, exports have been and will remain robust, as Fitch’s commodities team remains optimistic about copper production over the next few years. Exports will make up approximately 25.9% of GDP in 2023 on the back of robust mining export growth. This will keep Peru’s goods trade balance firmly in surplus territory at 4.9% of GDP versus a 2015-2019 average of 1.8%.
• Copper production and exports will likely continue to drive a current account deficit below the pre-pandemic average in 2024 and leave the current account deficit at 2.3%.
• Although a fall in remittances is expected in mid-2024 due to a slowing U.S. economy and an uptick in unemployment is anticipated in Peru's manufacturing sector, the country is well-prepared. Peru has a solid cushion of liquid reserves despite its slowing economy, and its external debts remain manageable. Additionally, Peru has more than 12 months of import cover in international reserves, which will bolster external account stability in the upcoming quarters."

(Source: Fitch Solutions)

• The government recently signed an agreement with the Caribbean Centre for Renewable Energy and Energy Efficiency (CCREEE) for the development of an Integrated Resource and Resilience Plan (IRRP) to aid in the efficient integration of renewables across the country, in line with its National Energy Policy targets.  CCREEE, which was established in 2018, helps member states navigate their energy transition.
• Bahamas Power and Light (BPL) Chief Executive Shevonn Cambridge at the signing said: “This is about an Integrated Resource and Resilience Plan. That plan looks at the assets the utility has and the goals we have in terms of migrating to more efficient production, particularly the integration of renewables. It looks at how we retire existing assets or how we look at any additional capacity we need and the integration of renewables.”. He also noted that the plan and other renewable energy initiatives are being funded by the Inter-American Development Bank (IDB).
• Dr Gary Jackson, executive director of CCREEE said: “With this plan, we want to look at the mitigation and adoption strategies The Bahamas may need to have given the high heat and hurricanes The Bahamas is experiencing.”
• The Bahamas National Energy Policy 2013 – 2033 was developed to ensure that The Bahamas has a modern, diversified and efficient energy sector that is affordable, reliable and resilient. To assist the Government in achieving its goals, the IRRP plan guides how a country can supply its need for electricity into the foreseeable future.
• CCREEE will gather data to develop and codify the IRRP planning and processes, identify key responsibilities, set timelines for activities and recommend criteria and standards for the development of policy and processes. In effect, it will develop the IRRP within the Bahamas National Energy Policy 2013-2033 framework.
• The agreement between the Bahamas government and CCREEE for the development of an IRRP is a crucial step towards achieving the goals outlined in the Bahamas National Energy Policy 2013-2033. This plan, funded by the IDB, will guide the country in efficiently integrating renewable energy, retiring existing assets, and planning for additional capacity needs. Ultimately, this initiative will contribute to a more affordable, reliable, and resilient energy sector in the Bahamas, better equipped to navigate the challenges posed by high heat and hurricanes.

(Source: CariCris) 

• One of the overarching market themes this year - aside from the hype around artificial intelligence - has been investors avidly building up bets on the Federal Reserve finally announcing an end to its cycle of rate hikes, only to have that optimism dashed.
• There's no doubt, the U.S. central bank is nearing the end of its mission to wrestle down inflation. Headline consumer price pressures are rapidly abating, thanks to a wholesale retreat in food and energy prices. Headline inflation in July rose 3.2% annually - a far cry from last June's 9.1% - and nearing the Fed's 2% target.
• Inflation as reflected in the Fed's preferred data point - the core personal consumption in expenditures (PCE) index - is running at 4.1%, having peaked in February 2022 at 5.4%.
• The economy isn't generating jobs as quickly as it was a year ago, but it's still set to add another 170,000 in August, which will mean more than 25 million workers will have been added to non-farm payrolls since the depths of the COVID pandemic in April 2020.
• Crucially, Fed Chair Jerome Powell has once again reinforced the "higher for longer" mantra that has underpinned most of his, and his officials', communications this year, no matter how much market participants have bet otherwise.
• U.S. two-year Treasury yields, the most sensitive to shifts in expectations for Fed monetary policy, posted their largest weekly rise in two months last week, after Powell's comments at the annual Jackson Hole Economic Policy Symposium. He vowed to tread carefully with rate rises and rely on incoming data but was clear about the endgame.
• “It is the Fed's job to bring inflation down to our 2% goal, and we will do so," he said. Money markets show traders believe the Fed has one more hike in the pipeline this year, which would bring its target rate to a range of 5.50%-5.75%, from 5.25%-5.50% right now. Just three months ago, when rates were at 5.125%-5.37%, markets were betting on a year-end range of 5.00%-5.25%, implying at least one rate cut this year.
• This week, investors get a dose of top-tier data to help shape their view on the Fed's next move. A second read of U.S. gross domestic product is due on Wednesday, while core PCE and August non-farm payrolls arrive on Thursday and Friday, respectively.

(Source: Reuters)

• Record levels of government debt, geopolitical tensions that threaten to split the global trading system, and the likely persistence of weak productivity gains may saddle the world with a slow-growth future that stunts development in some countries even before it starts.
• "Countries are now in a more fragile environment. They've used a lot of their fiscal resources to deal with a pandemic. Then you have policy-driven forces, geoeconomic fragmentation, trade tensions, the decoupling between the West and China," International Monetary Fund chief economist Pierre-Olivier Gourinchas said in an interview on the sidelines of an annual Fed conference. "If we get to a point where part of the world is stuck without catching up and has large amounts of population, that creates tremendous demographic pressures and migration pressures."
• Gourinchas said global growth may settle into a trend of around 3% annually, a figure far below rates above 4% seen when rapid advances in China's economy drove global output higher and which some economists consider borderline recessionary in a world where quick gains should still be achievable in large, less-developed countries.
• China is now suffering what may be chronic economic problems along with a shrinking population. Emerging industrial policies in the U.S. and elsewhere are reordering global production chains in ways that may be more durable or serve national security ends, but also be less efficient.
• The implications of public debt that is "here to stay" varies by country, they said, with higher-debt but higher-income nations like the U.S. likely able to muddle through over time, while smaller nations perhaps face future debt crises or binding fiscal constraints.
• Globally the fallout could be severe if public borrowing steers capital from countries that still have growing populations and less developed economies, said Cornell University economics professor Eswar Prasad.

(Source: Reuters)

• The Bank of Jamaica (BOJ) has reported that the foreign exchange rate and the market have remained relatively stable over the last two years, reflecting, in part, the actions taken by the institution.
• During the Central Bank’s recent quarterly monetary policy media briefing, Governor Richard Byles revealed that the BOJ, through its Bank of Jamaica Foreign Exchange Intervention Trading Tool (B-FXITT) facility, sold approximately US$585Mn in 2023. However, in contrast, the bank net purchased about US$761Mn over the same period.
• As of August 16, Jamaica’s gross international reserves remained substantial at approximately US$4.6Bn, which exceeded the standard measure of adequacy by approximately 15%, and the Bank projects that the reserves will remain adequate over the medium term.
• As it relates to inflation expectations, the BOJ’s latest survey showed less than 14% of the respondents indicated that a strong depreciation in the exchange rate was the most important factor behind their views of future inflation. Meanwhile, Mr. Byles said Jamaica’s economy continues to expand, which supports increases in aggregate demand for goods and services and can potentially drive inflation upwards.
• The Planning Institute of Jamaica (PIOJ) has estimated that the economy grew by 1.5% for the June 2023 quarter and that there are signs of continued expansion for the September 2023 quarter. Data from the Statistical Institute of Jamaica (STATIN) indicate that the country’s unemployment rate in April 2023 was 4.5%, the lowest on record.
• The Bank continues to project growth ranging between 1% and 3% for fiscal year 2023/24, largely due to expansion in the mining sector and continued growth in tourism and its allied industries. Over the medium term, the economy is projected to settle at its long-run growth rate of 1%-2%.

(Source: JIS News)

• Brazil has announced plans to release approximately $2 billion in its first sustainable sovereign bonds this September, a significant move towards eco-friendly financing.
• Dario Durigan, the executive secretary of the Finance Ministry, stated, "In the upcoming month, the world will be closely observing and acquiring our sustainable bonds." He made this remark during a session of the country's Climate Fund committee, highlighting that these bonds will be backed by green and social projects.
• "The expectation that we have in the Nation Treasury is that we issue something around $2Bn. It is a very relevant amount, it will be able to serve as a financing base for the ecological transition plan."
• Durigan said that during a meeting later on Thursday of the National Monetary Council (CMN) - Brazil's top economic body comprising the finance minister, planning minister and central bank governor - the government will greenlight the issuance of the country's first sustainable sovereign bonds and will define a new framework that will govern Climate Fund operations.
• In an interview with Reuters last week, Rafael Dubeux, who is coordinating efforts in the Finance Ministry's "ecological transformation" plan, disclosed that the initial allocation of Brazil's inaugural sustainable sovereign bonds will primarily benefit the Climate Fund under the oversight of the state development bank BNDES, aiming to finance actions to reduce emissions effectively.
• The bonds are part of President Luiz Inacio Lula da Silva's efforts to improve Brazil's record on the environment in a broad green plan that includes the establishment of a regulated carbon credit market.
• Brazil's ambitious step towards sustainable bonds underscores its commitment to environmental preservation and ecological transition. By tying financial mechanisms with green initiatives, Brazil not only sets a precedent for emerging economies but also reaffirms its dedication to global environmental objectives.

(Source: Reuters)

• Brazil's President called on Wednesday for the BRICS nations to create a common currency for trade and investment, to reduce their vulnerability to dollar exchange rate fluctuations.
• Brazil's president does not believe nations that do not use the dollar should be forced to trade in the currency, and he has also advocated for a common currency in the Mercosur bloc of South American countries. A BRICS currency "increases our payment options and reduces our vulnerabilities," he told the summit's opening plenary session.
• Building a BRICS currency would be a "political project", South African central bank governor Lesetja Kganyago told a radio station in July. "If you want it, you'll have to get a banking union, you'll have to get a fiscal union, you've got to get macroeconomic convergence," Kganyago said. "Importantly, you need a disciplining mechanism for the countries that fall out of line with it; plus they will need a common central bank, where does it get located?"
• BRICS leaders have said they want to use their national currencies more instead of the dollar, which strengthened sharply last year as the Federal Reserve raised interest rates and Russia invaded Ukraine, making dollar debt and many imports more expensive.
• The greenback's share of official FX reserves fell to a 20-year low of 58% in the final quarter of 2022, and 47% when adjusted for exchange rate changes, according to International Monetary Fund data.
• However, the dollar still dominates global trade. It is on one side of almost 90% of global forex transactions, according to Bank of International Settlements Data. De-dollarising would need countless exporters and importers, as well as borrowers, lenders and currency traders across the world, to independently decide to use other currencies.

(Source: Reuters)