• The Fed’s two-day meeting is expected to end Thursday with no new proclamations from the central bank, and Chairman Jerome Powell will be sure to distance himself from the election uncertainty.
• But he is likely to be asked about one of the most pressing concerns in markets — a fiscal stimulus to help the economy recover from the effects of the coronavirus. That topic has been a political hot spot, and it could be resolved in several ways depending on how the election turns out.
• “With a GOP Senate majority, the expectations for stimulus is absolutely getting dialed back, which is a good part of why yields are plummeting the way they are,” said Julian Emanuel, equity and derivatives strategist at BTIG. The 10-year Treasury yield went from a high 0.94% Tuesday night to about 0.75% Wednesday.

(Source: CNBC)

• For the year ended September 30, 2020 QWI Investments Limited reported an unaudited net loss of $452.97Mn (EPS: -$0.33), down 382.2% (or $701.57Mn) relative to the net profit of $248.60Mn (EPS: $0.55) reported in 2019.
• This performance was primarily due to losses from investments totaling $490.81Mn relative to the gain of $389.50Mn made in 2019. This was due primarily to losses on the Jamaican portfolio of $524Mn and $43Mn in gains on the overseas portfolios. QWI also had an unrealized currency loss of $3.30Mn for the period.
• The Company’s portfolio is currently largely weighted towards the local stock market which has fallen off significantly year to date. Looking forward, the directors believe the JSE will provide attractive investment returns as the Jamaican economy strengthens.
• QWI’s stock price has decreased by 29.5% since the start of the year, closing Tuesday’s trading session at $0.74. At this price, the stock currently trades at a P/B of 0.5x, which is below the Main Market Financial Sector Average of 1.7x.

(Source: QWI Financials)

• El Salvador is expected to run a large fiscal deficit in the quarters ahead as elevated government spending supports economic activity while a subdued economic recovery undermines revenue growth.
• Fitch Solutions revised its 2020 budget forecast to -11.3% of GDP, from -9.6% previously, and the 2021 forecast to -9.4%, from -6.2%, as the contraction in economic activity has led to a larger than expected fall in revenues.
• Large deficits in 2020 and 2021 will push up public debt significantly, and it is anticipated that public debt will peak at 94.4% of GDP in 2022, up from 73.3% in end-2019.

(Source: Fitch Solutions)

• Fitch Solutions revised its forecast for Ecuador’s 2021 fiscal deficit to 4.7% of GDP, from 2.8% previously, as lower average oil prices and the lingering impact of Covid-19 weigh on Ecuador's revenue growth and slow the pace of fiscal consolidation.
• Ecuador’s fiscal deficit is expected to narrow from a forecasted 7.0% in 2020 as the government continues to constrain expenditures and a return to economic growth supports a modest rebound in revenues.
• Ecuador’s debt levels will climb to 63.9% of GDP in 2020 from 52.8% in 2019, supported by continued IMF and other multilateral financings.

(Source: Fitch Solutions)

• The euro zone’s economic recovery stalled last month as the second wave of coronavirus cases and restrictions imposed to try and contain it whacked activity in the bloc’s dominant service industry, pointing to a double-dip recession, a survey showed.
• Alongside their peers, Germany and France -- the 19-country bloc’s two biggest economies -- have re-imposed tough lockdown measures, likely dealing a heavy blow this month as restaurants, gyms and shops remain closed and citizens stay at home.
• The eurozone economy contracted 11.8% in the second quarter but expanded a much-better-than-expected 12.7% in July-September after many lockdown restrictions were eased, official data showed on Friday.

(Source: Reuters)

• Oil prices rose nearly 3% on Wednesday after President Donald Trump falsely claimed victory in a tight U.S. election with millions of votes still to be counted and the final result not yet clear.
• A victory by Trump is viewed as bullish for oil because of sanctions on Iran and his support for Saudi-led OPEC oil cuts to support prices.
• A contested result and prolonged uncertainty are seen as the most bearish outcome for oil and markets in general, while a win for Joe Biden would be seen as bearish to neutral because of his support for green policies and softer stance on Iran.
• West Texas Intermediate CLc1was up $0.94 cents, or 2.44%, at $38.60 a barrel by 1156 GMT. Brent crude LCOc1 was up by 1.02 cents, or 2.50%, at $40.73.

(Source: Reuters)

• The global spread of COVID-19 will weigh on tourism demand in the quarters ahead, delaying Jamaica’s economic recovery.
• High unemployment and ongoing public health restrictions will weaken private consumption, while reduced external demand will undermine exports.
• Fitch Solutions has revised down its 2020 real GDP forecast to -7.1% y-o-y, from -5.8% previously, following a late-August spike in COVID-19 cases in Jamaica that limited commercial activity. Growth for 2021 is forecasted to return at 1.1%.

(Source: Fitch Solutions)

• The center-right Jamaica Labour Party’s (JLP) sizeable victory in Jamaica’s September 3 election will improve policy enactment and ensure policy continuity in the quarters ahead.
• Fitch Solutions noted that fiscal consolidation will remain a priority, but also noted that the government will be forced to increase expenditures in response to the domestic outbreak of Covid-19 and the slowdown in economic activity. The Bank of Jamaica (BOJ) will keep its monetary policy rate at 0.50% through end-2021 in order to boost lending amid the economic fallout from the Covid-19 pandemic.
• External account stability is unlikely to be challenged by a sustained current account deficit in the coming years. Improved reserves, an IMF programme and capital inflows will likely be sufficient to ensure stability.
• The Jamaican dollar (JMD) will depreciate over the coming months due to a limited supply of US dollars in Jamaica and high inflation. While the BOJ supported the value of the JMD in H2 2020, the agency expects that it will take a less active role in moderating the FX market.

(Source: Fitch Solutions)

• Fitch Solutions expects Paraguayan President Mario Abdo Benítez will prioritize improving security conditions over the coming months as the economy begins to recover in the wake of Covid-19.
• Despite violations of the country’s fiscal rule in the wake of Covid-19, it is likely that the conservative government will remain committed to lowering deficits over the coming years and maintaining the existing fiscal framework.
• Paraguay scores a 57.0 out of 100.0 on our Short-Term Political Risk index, largely the result of a poor security environment, a fractured Congress, and factions within the ruling ANR-PC party that will hinder policy formation.

(Source: Fitch Solutions)

• Following the August 2nd declaration of results of the March 2nd elections, Guyana has been removed from the Commonwealth’s watch list after fears had arisen that a rigged result was in the making.
• However, Guyana must prove its effectiveness in being able to convict those who launder money and pilfer state assets if it is to remain off the Financial Action Task Force (FATF) watch list.
• Progress would have been reflected in the country passing the fourth round of Mutual Evaluation tests which are scheduled for 2020.
• According to the Country’s Minister of Legal Affairs and Attorney General Basil Williams, the test is whether [Guyana] would have shown sufficient progress on effectiveness, for example having more conviction for offenses of money laundering, terrorist financing, and the purloining of state assets.
• He also stated that the capacity of the judicial system will have to be developed in order to meet this requirement.

(Source: Guyana Department of Public Information)