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10-year Treasury yield hits new record low of 1.27% Published: 27 February 2020

  • The yield on the benchmark 10-year Treasury note resumed its slide on Thursday and fell to a new record low as concerns over the impact of the coronavirus dogged financial markets around the globe.
  • The 10-year Treasury yield dropped 3 basis points to 1.27% for the first time ever while the 30-year yield slipped a similar amount to 1.779%. The 10-year rate has fallen 20 basis points since Monday in a reflection of global demand for the relative safety and positive yield U.S. debt offers. Bond yields fall as prices rise.
  • The move lower in yields also reflects traders’ expectations the Federal Reserve will step in at some point and cut rates. However, many economists doubt the central bank will deliver such relief and whether it will be effective.
  • The coronavirus, which began in Wuhan, China, has spread across the globe in recent weeks and sparked fears that it could hamper global economic activity if unchecked by effective government intervention.

Oil falls for third day as virus concern outweigh supply cuts Published: 27 February 2020

  • Oil prices fell for a fifth day on Thursday to their lowest since January 2019 as a growing number of new coronavirus cases outside of China fueled fears of a pandemic which could slow the global economy and lower crude demand.
  • Brent crude was down $1.47, or 2.8%, at $51.96 per barrel. West Texas Intermediate futures fell $1.35, or 2.7%, to trade at $47.38 per barrel.
  • In the five trading sessions through Thursday, Brent has dropped 10.6%, while WTI has declined 10.4%, their biggest five-day percentage losses since August 2019.
  • On Wednesday, for the first time ever, the number of new coronavirus infections outside China, the source of the outbreak, exceeded the number of new Chinese cases.
  • The spread to large economies including South Korea, Japan and Italy has caused concerns that fuel demand growth will be limited. On Wednesday, consultants Facts Global Energy forecast oil demand growth will only 60,000 barrels per day in 2020, or “practically zero”, because of the widening outbreak.

 (Source: CNBC)

Bank of Jamaica Holds Policy Rate Steady Published: 20 February 2020

  • On February 19, 2020, the Bank of Jamaica (BOJ) made a decision to hold its policy interest rate (the rate offered on overnight balances at BOJ) unchanged at 0.50%.
  • This decision was based on BOJ’s assessment that current monetary conditions are generally sufficient to support the achievement of its medium-term inflation target of 4.0% to 6.0% over the next 4 to 8 quarters.
  • Given the rapid growth in loans provided to the private sector, as well as alternative sources of financing such as corporate bonds and equities, the Bank will continue to closely monitor the impact of previously implemented monetary expansion measures on credit growth, capital market transactions, and consequently, on inflation and economic activity.

(Source: BOJ)

1834 reports solid improvement in bottom line Published: 20 February 2020

  • For the nine months ended December 2019, 1834 Investments reported net profit of $13.07Mn (EPS: $0.018), which represents a 78.1% increase from the $59.56Mn loss that was made during the same period one year prior.
  • The outturn was due to a 40.3% (or $23.79Mn) increase in total revenues combined with a 32.4% (or $31.27Mn) decline in total expenses resulting from an 11.6% (or $2.46Mn) decline in admin expenses coupled with a 38.3% (or $28.81Mn) decline in other operating expense.
  • The stock has declined by 2.8% since the beginning of the calendar year. 1834 Investments closed Wednesday’s trading session at $1.04 and currently trades at a P/E of 27.7x earnings which is above the Main Market Financial average of 17.9x earnings.

(Source: 1834 Financials)

Unemployment, Social Issues To Weigh On Economic Reform Agenda In Costa Rica Published: 20 February 2020

  • Opposition to fiscal austerity, a fragile governing coalition and the debates over social issues will limit policy formation in Costa Rica over the coming months.
  • Fitch Solutions do not expect President Carlos Alvarado will have the political support to enact additional fiscal consolidation measures in the coming quarters.
  • However, Fitch maintains Costa Rica's score of 64.9 out of 100 in our Short-Term Political Risk Index, as relatively strong social services and per capita GDP help to mitigate risks to social stability.  

(Source: Fitch)

Argentina's Central Bank Will Contribute To Elevated Inflation Published: 20 February 2020

  • Inflation in Argentina is expected to remain among the highest in the world, underpinned by the steady expansion of the money supply and a lack of trust in the financial system.
  • The forecast inflation will average 45.2% y-o-y in 2020, brought down only modestly from 53.8% in 2019 due to price controls on core goods.
  • Fitch believes current monetary policy is discouraging domestic savings and contributing to the structural drivers of elevated inflation.

(Source: Fitch)

CHINA REACT: Loan Prime Rates Drop, Cuts Ahead on Virus Hit Published: 20 February 2020

  • China’s lending rates fell -- and more cuts are coming as the authorities move to shore up an economy that’s reeling from the coronavirus outbreak. We see the official one-year Loan Prime Rate – the reference for corporate loans -- falling another 30 basis points this year after Thursday’s drop of 10 bps.
  • The one-year LPR fell to 4.05% from 4.15%. The five-year LPR, the reference for mortgage rates, was lowered to 4.75% from 4.80%. The reductions were in line with market expectations.
  • The move came after the People’s Bank of China lowered the interest rate for its one-year medium-term lending facility by 10 bps to 3.15% on Feb. 17 -- signaling it would drive lending rates lower to support the economy.

(Source: Bloomberg)

Oil near one-month high on supply threats, easing demand woes Published: 20 February 2020

  • Brent oil prices held near one-month highs on Thursday supported by China’s efforts to boost its economy, a drop in new coronavirus cases at the epicentre of the outbreak and supply concerns in Venezuela and Libya.
  • Brent crude futures LCOc1 were up 7 cents at $59.19 a barrel by 0939 GMT, after climbing to as high as $59.71 earlier in the day. West Texas Intermediate (WTI) crude futures CLc1 climbed 17 cents to $53.46 per barrel.
  • China’s move to cut its benchmark lending rate on Thursday also helped ease worries about slowing demand in the world’s second-biggest oil consumer and largest crude oil importer.
  • The United States this week sanctioned a trading unit of Russian oil giant Rosneft for its ties with Venezuela’s state-run PDVSA, a move which could choke the OPEC member’s crude exports even further.
  • At the same time, conflict in Libya that has led to a blockade of its ports and oilfields shows no signs of a resolution.

(Source: Reuters)

Wisynco’s Bottom-Line Increases Due to Strong Revenue Growth Published: 19 February 2020

  • For the first half of the financial year ending December 2019, Wisynco reported a net profit of $1.76Bn (EPS: $0.47), which represents a 13.8% (or $213.24Mn) increase over the $1.54Bn (EPS: $0.41) earned over the same period in the prior year.
  • The outturn was primarily due to a 28.2% (or $3.76Bn) expansion of revenue to $17.10Bn, which management attributes to growth in all major product categories.
  • Wisynco’s stock price has declined by 3.09% since the start of the year and currently trades at a P/E of 26.9x earnings which is above the main market manufacturing and distribution sector average of 18.2x earnings.

(Source: Wisynco’s Financials)

Inflation Expectations Increase Marginally Published: 19 February 2020

  • The December 2019 Inflation survey indicated a general expectation that inflation 12 months ahead will increase to 5.1% relative to the previous survey outturn of 5.0%.
  • The perception of inflation control increased in the December 2019 survey relative to the November 2019 survey.
  • Respondents anticipate that the currency will depreciate over all three surveyed time horizons (3-month, 6-month, and 12-month horizons).
  • The Present Business Conditions and Future Business Conditions Indices both reflected a higher level of optimism relative to the previous survey.

(Source: BOJ)