• Fitch Solutions maintains a neutral outlook on US and other Developed Market (DM) bond markets over the short term on the back of opposing factors. After having fallen between May and July, US bond yields could trade sideways within a wide range in the short term as investors weigh incoming economic data that could remain strong in the coming weeks. 
• However, at the same time, investors are still waiting for additional signals that the Fed could tighten monetary policy sooner than expected. Recent history suggests that the Fed’s chair Jerome Powell could signal a slightly more hawkish tone at the 2021 Jackson Hole Economic Policy Symposium, which will take place on August 26-28. 
• In EMs, there has been a clear gap between Asia and Latin America and emerging European countries due to epidemiological developments. The vaccine rollout in Asia has lagged significantly, resulting in restrictions being maintained across most economies and forcing central banks to maintain a dovish tone to support the economic recovery. Elsewhere, several central banks across Latin America and emerging Europe have already hiked interest rates aggressively as inflation has been rising, a trend that is likely to remain in place until end-2021. 
• In EM economies where central banks have been raising interest rates, bond yields have risen significantly the year-to-date across the curve.

 (Source: Fitch Solutions)

• Pfizer and BioNTech said Monday they have submitted early stage clinical trial data to the Food and Drug Administration as part of their U.S. application seeking authorization of a Covid vaccine booster for everyone 16 and older — not just people with weak immune systems. 
• The announcement from the drugmakers comes after federal health officials Friday approved administering Covid booster shots of Pfizer’s and Moderna’s vaccines to Americans with weakened immune systems, which includes cancer and HIV patients and people who have had organ transplants. 
• Federal health officials aren’t recommending booster doses for the general public at this time, but White House chief medical advisor Dr. Anthony Fauci has said everyone will “likely” need a booster shot at some point.

(Source: CNBC News)

•  Tourism Minister, Hon. Edmund Bartlett, has implored workers in the sector to sign up now to receive the coronavirus vaccine, as Jamaica anticipates the return of cruise ships. 
• Although cruise activities at Jamaica’s ports have been inactive for the past year and a half, the ministry continues to invest in the development of cruise tourism. Jamaica Vacations Limited (JAMVAC) has been driving this effort to take advantage of a new collaborative approach that will bring greater value for passengers, cruise lines and destination Jamaica. 
• The global cruise industry has cautiously resumed its voyages with new rules and guidelines. A total of 190 cruise ships are expected to take to the seas in August. With several countries lifting their ban on cruise shipping, and cruise lines anxious to recover lost ground, it is the ports of call which meet the strict health and safety protocols that will be first in line to receive vessels. 
• Minister Bartlett noted that Jamaica has been credited for its proactive approach in developing protocols for the tourism industry, which has contributed to the reopening of the tourism sector with a positivity rate of less than 1.0%. He added that it is time for the cruise subsector to play its part, as the ministry follows a strategic path in reimagining the tourism sector to rebuild faster, stronger and better.

(Source: JIS News)

• The Ministry of Housing, Urban Renewal, Environment and Climate Change is currently working towards ensuring that Jamaica can begin to benefit from incentives under the Reducing Emissions from Deforestation and Forest Degradation (REDD+) programme by early next year. 
• REDD+ was created by the Parties to the United Nations Framework Convention on Climate Change (UNFCCC) to incentivize developing countries to reduce or remove forest carbon emissions by awarding them carbon credits, which can be sold in carbon markets. 
• Principal Director of the Climate Change Division in the Ministry, UnaMay Gordon, has said that they are hopeful that by February 2022, they will have a structure for REDD+ in Jamaica. A complementary proposal has been put forward to the Green Climate Fund for some additional funding to advance further on the work being done. 
• The preparatory work includes collaboration with other areas of Government such as the Ministry of Culture, Gender, Entertainment and Sport on matters such as utilizing forest reserves that are a part of Jamaica’s cultural heritage or are located in Maroon communities, for example. After successful implementation of the framework for REDD+, Jamaica will qualify to earn from reducing emissions and removing carbon from the air through forest carbon sinks.

(Source: JIS News)

• The Office of the Auditor General, in a report tabled in the House of Assembly yesterday, revealed that the financial support from the International Monetary Fund (IMF) was critical in providing the Bahamian government with sufficient cash to make it to the end of the 2019-2020 fiscal year, following what it termed “a collision of catastrophes”. 
• “The collision of both catastrophes, Dorian and COVID-19, put the Budget in a crisis, tax receipts going down and government payments increasing,” the report said. “The required $250m funding assisted in addressing the supply and demand shock, and having provision for the economic downturn. 
• Most importantly, the funding was vital in facilitating the urgent measures taken by The Bahamas with respect to socio-economic impact and public health resiliency. The $250m was essential in providing budgetary support and sustaining the healthcare and mitigation measures in response to COVID-19.

(Source: The Tribune)

• The Panama Canal, which marks 107 years of operations on Sunday, August 15, has continued to work uninterruptedly to provide services as a transit route for world trade despite the pandemic. 
• For the first nine months of the fiscal year 2021, the canal and reported total revenues of $2.13 billion, with a growth of $322 million or 11% compared to the same period last fiscal year. 
• The budget for the interoceanic highway for fiscal year 2021, which will be completed on September 30, estimates total revenues of $3,308.9 billion and contributions to the National Treasury of $1,760.3 billion. 
• Sustained strong performance of the Canal will support the 12.2% rebound in GDP expected this year as well as the reduction in fiscal deficit as revenues rebound from a recent slump, supported by expanding canal activity.

(Source: Newsroom Panama & NCBCM Research)

• Global inflation seems to have stabilized at around 4.0% in July 2021, according to Fitch Solutions estimates. This suggests that inflation could be in the process of peaking, which would be in line with the easing of base effects as well as improving supply-side conditions as economies re-open. 
• Across the largest 24 economies that Fitch tracks on a monthly basis, inflation readings painted a mixed picture. Over the past month, 13 economies saw inflation come in higher than their reading in the previous month, eight economies saw slightly lower levels of inflation and three remained unchanged. Moreover, the number of above-target readings only inched higher by one count (Colombia). 
• It views this as a sign that its expectations that inflationary pressures are in the process of peaking and will most likely see a decline towards the end of Q3 and in Q4 seems to be echoed by financial markets. Indeed, inflation expectations, as proxied by the swaps market, point to inflationary pressures that remain somewhat elevated but anchored around pre-pandemic levels. 
• That being said, the agency does not expect a rapid decline in prices given that large supply-demand imbalances will persist for several months, and base effects will continue to flatter the inflation readings for several months yet. This means that even though inflation is peaking, it will remain elevated compared to pre-pandemic levels.

(Source: Fitch Solutions)

• Britain's economy grew by a faster-than-expected 1.0% in June, the first full month of indoor service for many hospitality firms, and also helped by the healthcare sector due to a rise in routine medical checkups after the pandemic. 
• But the official data showed British gross domestic product remained 2.2% smaller than it was immediately before the pandemic struck the country, a reminder of the damage done by Britain's long coronavirus lockdowns last year. 
• The month-on-month growth for the overall economy in June was stronger than an increase of 0.8% expected in a Reuters poll of economists. Britain's huge services sector led the way, growing by 1.5% in June. Healthcare contributed the most to growth, as family doctors saw more of their regular patients due to an easing of coronavirus precautions, the Office for National Statistics said. 
• The International Monetary Fund expects Britain's economy to grow by 7% in 2021, the same as the United States, as it bounces back from last year's slump.

(Source: Reuters News)

• Influenced by an increase in revenue, Stationary & Office Supplies’ net profit grew by 167.6% for H1 2021 to $58.43Mn (EPS: $0.23). 
• Revenues improved by 16.7% ($78.76Mn), which was more than sufficient to cover the 6.7% ($16.39Mn), 15.6% ($22.01Mn) and 13.5% ($5.11Mn) increases in direct costs, admin expenses and selling and promotional costs. 
• Managements believes this improvement in performance is a good indicator that Jamaica’s economy is continuing to rebound and expects that as it progresses through the summer months, it will see the return of children to school, which will also help improve the sales of SEEK back to school products in the market. That being said, the rise in COVID-19 cases in recent weeks could delay the reopening of schools and a further rebound in revenues. 
• SOS’s stock price has appreciated by 61.2% since the start of the year and closed Wednesday’s trading session at $7.32 per share. At this price, the stock trades at a P/E of 27.1x earnings, which is above the Junior Market distribution sector average of 21.4x.

Source: (SOS Financials)

• In its recent country report, Fitch Solutions estimated that Jamaica’s real GDP growth will rebound to 4.4% growth in 2021, from an estimated 9.9% contraction in 2020, driven by increased tourist arrivals. Recovery will be concentrated in H221, as the continued spread of COVID-19 restrained tourism activity in H121, undermining both exports and private consumption growth. 
• Jamaica’s current account deficit is anticipated to flip to a surplus of 1.0% of GDP in 2021, from a deficit of 0.1% in 2020, on the back of strong remittance inflows and services exports. 
• The Bank of Jamaica will keep its monetary policy rate at 0.50% through to the end of 2021 in order to boost lending amid the economic fallout from the pandemic. The Jamaican dollar is also expected to continue to depreciate in the short term as the domestic tourism industry continues to operate below pre-pandemic levels, limiting the supply of US dollars in Jamaica as inflation climbs. 
• However, there are downside risks in Jamaica's slow vaccination programme and rising crime. Jamaica's violent crime rate was the highest in Latin America and the Caribbean in 2020. A lack of economic opportunities could push the crime rate higher in H221 and 2022, weakening foreign investment inflows. Any delays to the recovery of the tourism industry would severely curtail Jamaica's economic growth outlook.

Source: (Fitch Solutions)