• Following the decision in July to reduce the reserve requirement of commercial banks in Trinidad and Tobago (T&T) from 14.0% to 10.0%, T&T banking system liquidity rose by about TTD$3Bn, according to the latest Monetary Policy Announcement by the Central Bank of Trinidad and Tobago (CBTT).
• On July 24, 2024, the Monetary Policy Committee (MPC) of the CBTT reduced the primary reserve requirement for commercial banks from 14.0% to 10.0%. The MPC stated at the time of the announcement, that daily excess reserves for July had fallen by 29% compared to June. And the June figure was lower than the excess reserves for May.
• The Central Bank also noted that growth in financial system credit to the private sector has been relatively strong in recent months. Consumer lending grew by over 10% (year-on-year) between March and June 2024, with a concentration on motor vehicle loans, refinancing and debt consolidation. Meanwhile, business and real estate mortgage lending rose by a monthly average of 9.2% and 5.1% respectively between March to June 2024.
• Finally, the Central Bank stated that the continued rise in domestic interest rates on treasury bills amid the sustained public sector financing requirements and decline in external interest rates led to a narrowing of the (negative) TT/US short-term interest differential. The differential moved from -349 basis points to -271 basis points between June and mid-September 2024.

(Source: CariCris)

• The Dominican Republic’s (Dom Rep) economy grew 5.6% in August, with growth  averaging 5.1% between January and August of this year.
• Overall growth between January and August 2024 was due to the performance of activities in construction (4.9%) and free trade zone manufacturing (6.6%). Likewise, service activities as a whole showed an accumulated increase of 5.4% relative to the previous corresponding period, seeing stand-out growth in hotels, bars and restaurants (7.1%), transportation and storage (5.9%), real estate and rental activities (5.8%) and communications (5.3%).
• The Central Bank explained that given its previous monetary and fiscal policies, the economy grew in an environment of price stability as inflation remained at the lower end of the 4.0% ± 1.0% range.
• Furthermore, the Central Bank also highlighted that, among its Latin American peers, Dom Rep had the fastest economic expansion between January and August according to the latest published information available.

(Source: Dominican Today)

• Buying a house may remain out of reach for many Canadians for the foreseeable future, with mortgage costs unlikely to fall enough to offset lofty home prices and weak spending power, economists and real estate agents say. Even with expectations that the Bank of Canada (BOC) will keep cutting rates in the coming months, the issue of home affordability - which has strangled Prime Minister Justin Trudeau's poll numbers - is unlikely to fade before the next election.
• Many Canadians have been priced out of the housing market since interest rates started rising two years ago. At the same time, a huge influx of immigrants has pushed Canada's population to record levels, further boosting housing demand and prices.
• For "the majority of potential buyers who are on the sidelines, if it means $50 or even $100 less a month thanks to lower interest rates, it's still unaffordable," said Robert Hogue, assistant chief economist at the Royal Bank of Canada. In the most expensive markets of Toronto and Vancouver, many potential buyers are still priced out, he said. Some of them should be able to buy a house next year, but not enough to restore balance.
• Housing affordability is a function of house prices, interest rates and a borrower's income. Those metrics have skewed unfavorably for prospective buyers since the start of the pandemic. Canadian house prices on average have increased by more than 30% since April 2020, while interest rates soared by 4.75 basis points until they started coming down in June.
• Calculations based on average house prices from the Canadian Real Estate Association show that monthly interest payments on a five-year fixed-rate mortgage are still 40% higher than in January 2020, even after a drop in mortgage costs from last year's highs.
• During the same period, real or inflation-adjusted household income has risen by 2.3%, while nominal income has increased by 21%, according to estimates from Statistics Canada. For affordability to return to pre-pandemic levels, house prices would need to come down by at least 10% and mortgage interest costs would have to drop by half from current levels.

(Source: Reuters)

• More stocks are participating in the S&P 500’s latest march to record highs, easing concerns over a rally that has been concentrated in a handful of giant technology names for much of 2024.
• The S&P 500 is on track to gain 5.0% in the third quarter, which ends on Monday. This time, however, optimism that the Federal Reserve’s rate cuts will boost U.S. growth is pushing investors into shares of regional banks, industrial companies and other beneficiaries of a strong economy and lower rates, in addition to the tech-focused stocks that have already seen massive gains this year.
• More than 60.0% of S&P 500 components have outperformed the index so far this quarter, compared to around 25.0% in the first half of the year. At the same time, the equal-weight version of the S&P 500 -- a proxy for the average index stock -- has gained 9% in the quarter, outperforming the S&P 500, which is more influenced by the heavily weighted shares of megacaps such as Nvidia and Apple.
• Various corners of the stock market are benefiting from expectations of lower rates and steady growth. The S&P 500’s industrial and financials sectors - seen by investors as among the most economically sensitive areas - are up 10.6% and about 10%, respectively, in the third quarter. Falling rates are also a boon to shares of smaller companies, which disproportionately struggle with elevated borrowing costs.

(Source: Reuters)

• Jamaica’s trade deficit fell slightly to US$2.23Bn for the January to May 2024 period, down 1.3% relative to the same period in 2024. The decline reflects a falloff in expenditure on imports despite a decline in the value of exports.
• Jamaica's imports declined to US$3.05Bn for the period, down 2.4% year on year and was largely due to a reduction in imports of “Raw Materials/Intermediate Goods” and “Fuels and Lubricant”, which fell by 13.5% and 8.2%, respectively.
• The declines in “Fuels and Lubricant” and “Raw Materials/Intermediate Goods” could be attributed to reduced imports of crude oil, which decreased by 10.1%, and construction materials, which fell by 20.3%, due to lower imports of iron and steel for construction, along with non-metallic mineral manufactures.
• However, a 57.7% decline in the re-export of “Mineral Fuels” resulted in revenues from exports falling by 5.4% to $823.9Mn.
• From January to May 2024, Jamaica's primary import source markets were the USA (38.9%), China (8.8%), Japan (4.1%), Brazil (3.7%), and Trinidad and Tobago (3.2%). Import spending on goods from these nations dropped by 10.4% to US$1.79Mn, mainly due to a significant reduction in "Mineral Fuels" from the USA and Brazil.
• On the export side, the USA (40.2%), Iceland (9.6%), Russia (7.6%), Canada (5.9%), and Netherlands (5.0%) were the top five markets for Jamaican exports. Despite the falloff in total exports, export earnings to these five countries rose by 26.6% to US$562.2Mn, chiefly due to higher exports of alumina to Iceland.

(Source: STATIN)

• Director of the Jamaica Cyber Incident Response Team (JaCIRT), Lieutenant Colonel Godphey Sterling, reported a 78% reduction in the number of attempted cyberattacks experienced locally over the past year.
• “This is due primarily to greater awareness within our population. Actions are being taken to mitigate vulnerabilities rather than treating with breaches and, therefore, attackers now find that they have less and less vulnerable enterprises and connections that they can exploit,” he informed JIS News.
• The Director noted that despite this reduction, there has been an increase in the number of ransomware compromises experienced in Jamaica. Compromises have been identified in the hotel industry, financial institutions, insurance companies and media entities, with some cases involving the exfiltration of personally identifiable information.
• Affected entities are urged to report the matter to the Office of the Information Commissioner and inform their clients of potential data exposure, particularly those in the financial sector.
• “It, therefore, means that if you are a client of the financial institutions that were hit, you need to be paying attention to your accounts. Pay attention to your balances for at least the next six months to ensure that you can spot any undue or unfamiliar transactions, particularly for large sums, on your accounts,” Col. Sterling said.

(Source: JIS)

• The political backdrop in Barbados is expected to remain relatively favourable in 2024 and 2025 due to strong government and social stability according to Fitch Solutions. Part of this trend will reflect improving social stability as economic conditions for households continue to improve.
• Consumer price inflation fell to 4.2% year-over-year (YoY) in February (latest available data), down from 6.5% YoY in the year-earlier period, owing to stabilising food and energy prices. Fitch forecasts that inflation will fall to an average of 3.9% in 2024 and 3.0% in 2025, which will provide some support to real household disposable incomes and consumer confidence.
• Furthermore, Barbados’ tourism sector will have another record year for arrivals in 2024, benefitting employment and wages in the sector (which indirectly employs around 20% of the workforce). Reflecting this trend, unemployment fell to 8.2% in the final quarter of 2023, the lowest level in four quarters.
• Against the backdrop of a gradual improvement in living standards, the already limited risks of strikes or protests in Barbados will decline in the months ahead. Of note, protests in Barbados are relatively rare and, when they happen, are normally peaceful.
• Given this backdrop, Barbados now holds a score of 26.1 (out of 100) in the Social Risk component of Fitch’s Political Risk Index (a high score implies high risk). This is a slight improvement from a score of 26.3 in the previous quarter and compares more favourable to Jamaica (35.8) and Trinidad and Tobago (32.43).

 (Source: Fitch Solutions)

• The Bank of Mexico (Banxico) lowered its benchmark interest rate by 25 basis points to 10.50% on Thursday, September 26, the second straight cut as price pressures have been easing in Latin America's No. 2 economy.
• The latest rate cut approved by the central bank's five-member governing board was not unanimous. Deputy Governor Jonathan Heath voted to hold the rate at 10.75%. Analysts polled by Reuters had overwhelmingly forecast the 25-basis-point cut.
• In a statement announcing its decision, Banxico noted that the global inflation outlook has improved while the closely watched core inflation rate, considered a good indicator for price trends, is expected to keep decreasing.
• "Looking ahead, the board expects that the inflationary environment will allow further reference rate adjustments," the statement said, emphasising; however, that the outlook for inflation "still calls for a restrictive monetary policy stance."
• Mexico's annual headline inflation slowed to 4.66% in the first half of September, official data showed on Tuesday, its fourth consecutive fortnight of declines. Core inflation moderated to 3.95%, its lowest level since early 2021.
• In August, Banxico also cut its benchmark interest rate by a quarter percentage point to settle at 10.75% in a divided decision, at the same time that it upwardly revised its year-end forecast for the rate of rising consumer prices.

(Source: Reuters)

• The number of Americans filing new applications for unemployment benefits dropped to a four-month low last week, suggesting that the labour market remained fairly healthy. The upbeat outlook on the economy was underscored by other data on Thursday, showing corporate profits increased at a more robust pace than initially thought in the second quarter.
• Strong profit growth should help to underpin the labour market and investment. The economy's resilience could make it harder for the Federal Reserve to deliver another 50-basis points interest rate cut in November, as some investors are hoping.
• Initial claims for state unemployment benefits dropped 4,000 last week to a seasonally adjusted 218,000 for the week ended Sept. 21, the lowest level since mid-May, the Labour Department said. Economists polled by Reuters had forecast 225,000 claims. Unadjusted claims decreased 5,957 to 180,878 last week. Though the labour market has lost momentum amid declining job openings and a step-down in hiring, layoffs have remained low.
• The continuing claims data covered the week during which the government surveyed households for September's unemployment rate. Continuing claims fell between the August and September survey week. The jobless rate slipped to 4.2% in August after rising to 4.3% in July. The increase in the unemployment rate from 3.4% in April 2023 as a surge in immigration boosted labor supply has raised fears of rapid labor market deterioration.
• A separate report from the Commerce Department's Bureau of Economic Analysis showed corporate profits, including inventory valuation and capital consumption adjustments, increased at a $132.5 billion annualized rate in the second quarter. They were revised up from the $57.6 billion pace estimated last month.
• The revision reflected a sharp upgrade to domestic profits of nonfinancial corporations, now estimated to have increased $108.8Bn instead of $29.2Bn. That could support business spending on equipment.

(Source: Reuters)

• New orders for key U.S.-manufactured capital goods unexpectedly rose in August, though business spending on equipment appears to have lost momentum in the third quarter. Non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, increased 0.2% last month after a downwardly revised 0.2% drop in July, the Commerce Department's Census Bureau said on Thursday.
• Economists polled by Reuters had forecast these so-called core capital goods orders would be unchanged after a previously reported 0.1% dip in July. Core capital goods orders gained 0.3% year-on-year in August. Higher borrowing costs have been a constraint on business investment, though a loosening of financial conditions as the Federal Reserve ready to cut interest rates boosted spending on equipment in the second quarter.
• Core capital goods shipments edged up 0.1% after falling 0.4% in July. Non-defense capital goods orders dropped 1.3%. They soared 42.1% in July. Shipments of these goods fell 1.6% after rising 4.8% in July. Shipments go into the calculation of the business spending on equipment components in the gross domestic product report. Orders for durable goods, items ranging from toasters to aircraft meant to last three years or more, were unchanged last month after surging 9.9% in July.
• There were increases in orders for electrical equipment, appliances and components, machinery, fabricated metal products, and computers and electronic products. Orders for transportation equipment fell 0.8% after soaring 34.6% in July. Motor vehicles and parts orders rose 0.2%.
• Commercial aircraft orders and parts fell by 7.5%. Boeing reported on its website that it had received 22 orders last month, down from 72 in July. The outlook for aircraft orders is dim as the world's largest aerospace company deals with a range of issues, including a crippling strike. The head of the Federal Aviation Administration told a U.S. Senate panel on Wednesday that Boeing must address a series of safety issues before he will let them boost 737 MAX production.

(Source: Reuters)