• The British public's expectations for inflation over the coming year have shot up by a record amount this month, raising the risk that the Bank of England will send a hawkish message soon, Citi said on Tuesday. 
• The monthly inflation expectations survey showed that public inflation expectations for the next 12 months jumped to 4.1% in September from 3.1% in August, the biggest monthly increase since the survey began more than 15 years ago. 
• Longer-term inflation expectations for the next five to 10 years rose to 3.8% in September from 3.5% in August. “Today’s data, especially the movement in long-term expectations, suggest growing risks to inflation expectations could become de-anchored to the upside. The sharp increase risks a hawkish response from the (Monetary Policy Committee) this week," Citi said. 
• Financial markets expect the BoE to start raising interest rates early next year, possibly as soon as February, though most economists think a move will only come towards the end of 2022.

(Source: Reuters)

• The S&P 500 slipped Tuesday, as an intraday rebound faded amid slowing global growth worries and difficulties in China ahead of the Federal Reserve monetary policy decision due Wednesday.  
• The S&P 500 fell 0.1%, the Dow Jones Industrial Average slipped 0.15% or 50 points, the Nasdaq added 0.2%. 
• Cyclical sectors including energy and consumer discretionary recovered some losses from Monday’s rout, but gains were kept in check by concerns about a potential economic crisis in China, and the wider implications for global growth, as beleaguered real estate giant Evergrande, is unlikely to receive a government bailout.

(Source:Investing.com)

• Micro, small and medium-sized enterprises (MSMEs) affected by the COVID-19 pandemic are to benefit from $3.0Bn in loans and grant support through partnership between the Ministry of Finance and the Public Service and the Development Bank of Jamaica (DBJ). Three newly created products are being provided to MSMEs under the programme – MSME recovery loan facility; Go-Digital loan facility; and a Go-Digital Grant. 
• Under the DBJ’s Social and Economic Recovery and Vaccine (SERVE) Jamaica Programme, the entities will have access to funds to digitise their operations to better serve clients as well as recover from the economic fallout that has affected their cash flows. 
• Finance Minister, Dr. the Hon. Nigel Clarke, explained that the $2.0Bn MSME recovery loan facility will allow entities to access up to $10.0Mn at a rate of 5.0%. He noted that this loan can be used to address cash-flow deficiencies and refinance existing debt that might be too onerous for entities to undertake at this time. 
• In addition, the $1.0Bn Go-Digital loan facility should allow businesses to transform their operations by acquiring the appropriate software that allows them to handle their customer, human resource or accounting needs and, therefore, position them in a more resilient position to face this pandemic.

(Source: JIS News)

• The scale of the economic and fiscal challenges facing the new Philip Davis-led administration were laid bare Friday, after Moody’s further downgraded The Bahamas’ sovereign creditworthiness. 
• The credit rating agency, in reducing the country’s long-term issuer and senior unsecured ratings to ‘Ba3’ from ‘Ba2’, warned that the devastation inflicted by COVID-19 and Hurricane Dorian will have “lasting consequences” for the Bahamian economy with stopover arrivals only returning to pre-pandemic numbers in 2024. 
• This latest action plunges The Bahamas further into non-investment grade or ‘junk’ status, with Moody’s adding that the country’s $10.356Bn national debt is now more than six times’ bigger than the Government’s annual income or revenue base. 
• The consequences of the latest downgrade include a further potential increase in the Government’s borrowing costs when it goes out to raise hundreds of millions of dollars in more debt financing later this year.

(Source: Moody’s Investor Service & The Tribune)

• Fitch Solutions expects surging oil revenues will narrow the Guyanese government’s fiscal deficit over the coming years even as the current administration drastically increases spending. 
• The agency forecast the budget deficit will narrow to 4.7% of GDP in 2021 and 3.2% in 2022, from 5.8% in 2020. 
• While the country’s debt stock will rise from 34.7% of GDP (2020) to finance its deficit, it is expected that the debt will peak at 36.0% of GDP in 2021, and stabilise thereafter as substantial economic growth helps to contain debt accumulation.

(Source: Fitch Solutions)

• Over the past month, Fitch Solutions has made downward revisions to its growth outlook for the US and China. For the US, the 2021 growth forecast was lowered from 6.2% to 6.0% on the back of continued supply-side challenges. 
• For China, Fitch revised its growth forecast from 8.5% to 8.3%. This has placed downside pressure on the 5.7% global growth forecast that it has penciled in for the full year, and consensus global growth expectations have declined slightly from 6.0% to 5.9% over the past month. 
• These dynamics are confirmed by high frequency data such as exports, purchasing managers' index (PMI) surveys, credit growth and confidence indicators - all of which point to the fact that growth peaked several months ago. Looking to 2022, Fitch forecasts another year of above-trend growth of 4.2% although it is also slightly below consensus estimates of 4.5%. Continued progress in terms of vaccinations and only a gradual removal of policy support underpin the view for still-strong growth.

(Source: Fitch Solutions)

• World stocks sold off sharply on Monday while safe-haven assets gained as troubles at property group China Evergrande fed concerns about spillover risks to the economy, sparking fresh investor worries ahead of a busy week of central bank meetings. 
• MSCI's gauge of stocks across the globe shed 1.63%, its biggest one-day percentage fall day in about two months, as Wall Street's benchmark S&P 500 sagged 1.7% and the tech-heavy Nasdaq tumbled 2.2%. 
• Worries over Evergrande come as a rally in equities has stalled recently with investors focused on the impact of coronavirus cases on the economy, and when central banks will ease back on monetary stimulus. Given the Evergrande concerns investors moved into safe havens, with U.S. Treasuries gaining in price, and pulling down yields.

(Source: Reuters)

• For the year ended May 31, 2021, Knutsford Express Services Ltd (KEX) reported a net loss of -$95.98Mn (EPS: -$0.19) down from the net profit of $33.56Mn recorded in the previous year. 
• The ongoing pandemic continues to affect passenger travel negatively as a consequence of the continuation of government implemented curfews. Consequently, there was a 38.3% fall in revenues, which along with an impairment loss on goodwill and motor vehicles, resulted in the net loss. 
• The overall impact of the decline in revenues was tempered by a 26.6% reduction in admin and general expenses. Due to the lower operating activities, KEX saw reduced salaries, wages and related expenses, staff training and welfare, travelling, advertising and promotion, fuel, insurance and toll fees. Finance costs also declined on the back of lower interest expense on right-of-use asset and bank charges. 
• With containment measures still in place and new variants of the virus emerging and fueling the need for social distancing and the fear of travelling, we expect revenues to remain depressed possibly resulting in further net losses in the near term. However, as vaccination rates increase, this should facilitate a relaxation of restrictions, greater business activity, higher employment and more confidence around travelling in the medium to long-term. This would also support a gradual rebound in KEX’s operating performance. 
• Knutsford Express’ stock price has declined by 2.9% since the start of the year and closed Thursday’s trading session at a price of $6.50 per share.

(Source: KEX Financials & NCBCM Research)

• Late last week, the Central Bank reported that consumer prices rose by 0.8% month over month (MoM), and 7.9% YoY, in August. Annual inflation was 2 basis point (bp) higher than in July, thus stopping the convergence process projected by the monetary authority. 
• Year to date, accumulated inflation was 5.4%, while 12-month average inflation jumped to 7.3%, its highest level since May 2012. The central bank reiterated that price pressures are mainly due to external shocks associated to food items and oil. In addition, it said that domestic inflation also reflects global supply disruptions, and that such distortions could last until early 2022. 
• Meanwhile, other indicators continue to show that DomRep’s economic recovery keeps taking hold. On the fiscal front, preliminary data through the end of last month show a 41% YoY increase in revenues during the first eight months of the year, leading to an overall surplus of almost 0.2% of GDP (versus a 3.8% deficit in the same period of 2020). 
• Total tourist arrivals reached almost 477,000 in August, more than triple the number a year before and almost the same as in 2019. On a YTD basis, arrivals totaled 2.9Mn, a 79% YoY increase and almost two thirds of the arrivals during the same period of 2019. The government projects that arrivals will total 4.5Mn this year, some three fourths of pre-pandemic levels.

(Source: Oppenheimer)

• The snap election in the Bahamas on Thursday is likely to be the tightest in years, polls show, as Prime Minister Hubert Minnis seeks a second term after the economy suffered its deepest crash since at least 1971. 
• According to a survey by Intel Cay, Minnis’ ruling FNM party entered election day with 40% approval ratings versus 39% for the opposition Progressive Liberal Party. Some 12% of voters remain undecided. The survey of 5,868 people has a margin of error of plus or minus 3%.  
• The high number of undecided voters and razor-thin margins make the race one of the most unpredictable in recent memory, said Queswell Ferguson, one of the founders of Intel Cay, speaking in a phone interview after polls opened. 
• The country was still recovering from the devastation wrought by Hurricane Dorian in 2019 when it saw its vital tourism industry hammered by COVID-19. Amid lockdowns and curfews, the economy shrank 16% in 2020, one of the world’s deepest slumps, and is only expected to recover about 2% this year.  

(Source: Bloomberg)