• This week, the Federal Reserve is widely expected to announce the unwinding of its monthly bond-buying program, a measure it started to support the economy during the pandemic. However, the bigger story for markets is how the central bank will discuss inflation. 
• That’s because report after report of hotter-than-anticipated inflation has ramped up expectations that the Fed will fight the trend of higher prices by beginning to raise interest rates next year, about six months sooner than the last Federal Reserve forecast. 
• Economists expect the central bank to say after its 2-day meeting concludes Wednesday that it will begin winding down its $120 billion in monthly bond purchases by mid-November or December and end the program entirely by the middle of next year.

(Source: CNBC)

• Oil prices fell on Wednesday as industry data pointed to a big build in crude oil and distillate stocks in the United States, the world’s largest oil consumer, and as pressure mounted on OPEC to increase supply. 
• Brent crude futures fell by 98 cents, or 1.2%, to $83.74 a barrel by 0034 GMT, while U.S. West Texas Intermediate (WTI) crude futures tumbled by $1.32, or 1.6%, to $82.59 a barrel. 
• “Crude oil lower as pressure mounted on OPEC to boost output. U.S. President Biden led calls from major economies for the group to increase production beyond what has already been agreed,” analysts from ANZ said in a note on Wednesday. 
• Crude stocks rose by 3.6Mn barrels for the week ended Oct. 29. Gasoline inventories fell by 552,000 barrels and distillate stocks rose by 573,000 barrels, the data showed, according to the sources, who spoke on condition of anonymity. Data from the U.S. Energy Information Administration, the statistical arm of the U.S. Department of Energy, will be released later on Wednesday. 
• In a sign that high prices are encouraging more supply elsewhere, BP said on Tuesday it will ramp up investments in its onshore U.S. shale oil and gas business to $1.5Bn in 2022 from $1Bn this year.

(Source: CNBC)

• According to Fitch Solutions, the Jamaican economy will rebound slowly in 2021 as tourism moderately recovers but remains below pre-pandemic levels. 
• In the medium term, however, Fitch Solutions expects Jamaica to see stronger economic performance following a reform programme, which will put the country on a more sustainable growth trajectory. 
• After poor economic governance led to two sovereign debt defaults since 2010, Jamaica is now closely coordinating policy with the IMF in a bid to improve its business environment, rein in government spending, diversify its economy and reduce its external vulnerabilities. As a result of recent and upcoming initiatives, Fitch is forecasting that real GDP growth will average 2.6% over the next decade. This remains significantly above the average of just 0.2% over the past 10 years. 
• Following difficult reforms, including streamlining the government and reducing public outlays, Jamaica's fiscal deficit has turned into a modest surplus, and Fitch expects this to continue over the coming decade. Its view for sustained fiscal consolidation is supported by efforts to expand the tax base. Although Jamaica has lowered its corporate tax rate as part of its ongoing efforts to improve the business environment and incentivize investment, the government has worked to simplify its consumption tax framework and eliminate tax breaks for some industries, which will lead to increased revenue over the long term. 
• Better fiscal management on the part of the central government is critical for Jamaica's future, since investors concerned about the country's long-term viability will need assurances that further defaults are not on the horizon. Fitch believes that a political consensus has emerged over demonstrating a firm commitment to more sustainable economic policy, which will underpin progress from a business environment standpoint.

(Source: Fitch Solutions)

• Household spending in Jamaica will remain by far the largest component of economic activity in 2021 (89.8% of GDP in 2019). While Fitch forecasts that annual growth will average 2.3% from 2021 to 2030, relatively weak investment will ensure that household spending will make up a greater part of the economy. 
• Fixed investment currently accounts for approximately 24.6% of GDP, supported by large investments in Jamaica's tourism industry. Tourism and the services sector will remain key drivers of economic growth, with agriculture and manufacturing playing an increasingly important role. 
• Consumption will be supported by structurally lower inflation rates (compared with historical averages) and rising employment. Additionally, programmes aimed at reducing taxes for lower-income households will bolster disposable incomes.
• Fitch expects government consumption as a percentage of GDP to decline moderately over the next decade. The Jamaican government will continue to exercise fiscal restraint, adhering to International Monetary Fund-prescribed policies aimed at reducing the national debt. Government consumption as a percentage of GDP already fell from 16.3% in 2012 to 13.6% in 2019, with further plans to reduce government outlays. 
• Gross fixed capital formation accounted for 24.1% of GDP in 2019. In the medium term, Fitch expects to see a moderate rise in investment as a share of economic output as tax reductions help spur investment, particularly in the tourism sector. 
• That being said, over the long term, structural weaknesses, such as corruption, crime, poor infrastructure and an unskilled labour force, will weigh on investment and reduce its share of the overall economy.

(Source: Fitch Solutions)

• Fitch Solutions expects the Costa Rican economy will grow 3.9% in 2021 and 3.4% in 2022, marking a full recovery from the COVID-19 pandemic, which caused real GDP to contract 4.5% in 2020. 
• Private consumption will lead the economic rebound in Q421 and H122 as COVID-19 risks ebb and inflation remains subdued, though consumption and investment will decelerate from H222 onwards as the government tightens fiscal policy and borrowing costs rise. 
• Fitch notes downside risks to its growth outlook in the short-to-medium term with the main risks being a sudden slowdown in the global economy or if domestic instability in Costa Rica constrains economic activity. 

(Source: Fitch Solutions)

• The Central Bank of Barbados (CBB) revised its 2021 growth outlook to 1%-2% in its 3Q21 review from the 0%-3% estimate in the 2Q21 review. 
• This was one of several downward revisions to the growth forecast this year, with previous estimates as high as 7%-10% at the onset of the calendar year. Economic activity improved 10% Y/Y in 3Q21, reflecting an improving tourism sector and making the second consecutive quarter of positive growth. 
• However, accumulated activity through the first nine months remains 3.2% below the 2020 level. Long-stay tourist arrivals totaled 43k during the quarter, representing a 225% Y/Y improvement but are 72% below the pre-pandemic level. 
• The results are said to point to the process of a return to normalcy for the pandemic depressed tourism industry, with a speedier recovery contingent on the developments in Barbados’ key source markets as well as the vaccination efforts domestically.

(Source: Oppenheimer)

• Global equities moved toward record highs on Thursday and U.S. Treasury yields rose as investors discounted weak U.S. economic growth data to retain their focus on strong corporate results and interest rate expectations amid rising inflation. 
• U.S. gross domestic product increased at a 2% annualized rate last quarter, the slowest since the second quarter of 2020 when the economy was beset by COVID-19 pandemic restrictions, the Commerce Department said in its advance GDP estimate on Thursday. 
• The weak GDP figure was offset by continued improvement in U.S. jobless claims, which dropped 10,000 to a seasonally adjusted 281,000 last week, remaining below the 300,000 threshold for the third straight week.
• "The GDP numbers are not a surprise since we've come off a bottom and it's going to slow to the normal pre-COVID pace," said Dan Genter, chief investment officer at RNC Genter Capital Management in Los Angeles. "The earnings confirm that the multiple is sustainable and it's giving people confidence not to exit the market and even to put money in."

(Source: Reuters)

• The pandemic-induced loss in working hours in 2021 will be equivalent to 125 million full-time jobs, the International Labour Organization (ILO) said on Wednesday, in a sign that the global labour market is not recovering as expected this year. 
• That number is 25 million higher than what the ILO predicted in its last report in June, affected primarily by the disparities in vaccine rollouts in poorer and richer countries.
• Globally, the number of hours worked is set to be 4.3% less than the pre-pandemic level, the ILO said. 
• However, when that figure is calculated based on countries' income level, there is a 2.1 percentage points difference: Rich countries saw only a 3.6% loss, versus a 5.7% for poorer nations.

(Source: Reuters)

• The Port Authority of Jamaica (PAJ) is working assiduously to ensure a safe and secure return of cruise operations at all the island’s ports by early December 2021. Assistant Vice President, Marketing Communications at the Port Authority, Kimberley Stiff, said that the entity is hosting a series of meetings to apprise various interest groups and the communities in which it operates, of the status of the resumption of cruise operations in preparation for the start of the upcoming season. 
• The Port Authority, with the guidance and support from the Ministry of Health and Wellness, has been systematically devising and implementing mechanisms and solutions to ensure a safe and secure restart of the cruise-shipping sector within the COVID-19 operational context. The authority has also been working closely with the Ministry of Tourism and its select agencies in this regard. 
• Already, several cruise ship calls have been secured for the upcoming season, some of which are scheduled to start in mid-November. These, Miss Stiff said, include inaugural visits as well as calls from ultra-luxury premium cruise lines. 
• She said that the high level of interest in Jamaica by cruise operators, is attributed, in part, to the successful restart of activities at the port of Ocho Rios, after a 17-month absence due to restrictions arising from COVID-19. She noted that the state-of-art, modernized world-class cruise ports and facilities also add to the island’s attractiveness as a cruise destination. 
• Cruise shipping is one of the PAJ’s core business segments, which contributes significantly to the Jamaican economy. The success of many sectors, small and medium-sized businesses, as well as entrepreneurs, is dependent on the viability of cruise shipping. Several professional and stakeholder groups benefit from cruise operations, as the industry plays an integral role in sustaining their livelihoods. As a result, cruise resumption will fuel business activity and economic growth, bolstering private consumption in the island’s port cities and towns.

(Source: JIS News)

• Disagreements about pension cuts between the Puerto Rican legislature and the federal board overseeing its finances have increased the risk that a deal with bondholders to end Puerto Rico’s bankruptcy will not move forward. 
• Fitch Solutions believes this scenario would be negative for Puerto Rico’s political and economic stability, as it could lead creditors to demand immediate repayment of their bonds while increasing the risk of public spending cuts, potentially driving social instability. 
• Even if a deal is made to support debt restructuring in the near term, the agency sees a risk that public pensions will see cuts in the long term, which would likely spark public protests.

(Source: Fitch Solutions)