• U.S economic growth slowed in the second quarter by less than forecast as consumer spending topped estimates, though weaker business investment and exports underscored the risks spurring the Federal Reserve toward an interest-rate cut next week.
• Gross domestic product expanded at a 2.1% percent annualized rate, according to Commerce Department data Friday that topped forecasts for 1.8%. That follows an unrevised 3.1% advance in the first quarter and updated data showing growth last year was slower than previously reported.
• Consumer spending, the biggest part of the economy, increased 4.3%, while government spending climbed 5% and offered the biggest boost in a decade.
• Friday’s report showed fresh evidence that trade is weighing on the expansion as exports dropped 5.2% while imports rose just 0.1%. Overall growth on a year-over-year basis slowed to 2.3%, the weakest pace in two years.

(Source: Bloomberg)

• International Monetary Fund (IMF) Resident Representative, Dr. Constant Lonkeng Ngouana, says the reduction in Jamaica’s unemployment rate to 7.8% is a “tremendous achievement”.
• Noting that the rate was approximately 16.3% at the start of Jamaica’s current engagement with the organization in May 2013, Dr. Ngouana contends that “more than halving this in six years is very significant”.
• He was commenting on the results of the Statistical Institute of Jamaica (STATIN) April 2019 Labour Force Survey, which was outlined during the agency’s recent quarterly briefing at The Knutsford Court Hotel in New Kingston.
• Dr. Ngouana argues that the level of reduction in unemployment recorded thus far “is not something that happens very often” in countries experiencing the extent of economic challenges Jamaica faced.
• “The trend in the world has been that economies, after their crises, tend to have jobless recoveries,” he notes. The IMF Rep says in Jamaica’s case, the opposite has been occurring, where, while growth may not yet be at the desired level, a significant number of jobs are being created.

(Source: JIS)

• Fitch Solutions has stated that they expect that the outcome of Guatemala’s presidential election will have limited impact on the country’s infrastructure sector, leaving their construction industry forecasts for the market intact.
• It is expected that both candidates set to compete in the upcoming second-round vote to look to boost infrastructure investment above current levels, focusing on road investment in particular.
• Substantial challenges to infrastructure development in the market and the exit of a UN-backed investigative body will limit the ability of Guatemala’s next government to realize its infrastructure agenda.

(Source: Fitch Solutions)

• Just as U.S. and Chinese officials signal their first return to the negotiating table since trade talks collapsed in May, defense hawks in Beijing accused the U.S. of undermining global stability.
• A coincidence perhaps, but the sharp rhetoric is a vivid example of how fragile relations have become between the world’s two biggest economies.
• China’s military is also rapidly modernizing as it pushes to extend its influence in the East China Sea, South China Sea, and the Indian Ocean, spurring tensions in a region dominated by the U.S. military since the end of World War II.
• Further, Huawei, the Chinese tech giant on the U.S. blacklist, quickened revenue growth to roughly 30% in the first half after securing critical supplies to keep production going despite U.S. export restrictions.
• Taken together, the mood music hardly bodes well for a major breakthrough when senior U.S. trade officials meet their Chinese counterparts in Shanghai on Monday.

(Source: Bloomberg)

• The continuing decline in German manufacturing is starting to look increasingly worrying, with Purchasing Managers Index data for the sector this morning coming in at the lowest level in seven years.
• That 43.1 reading for July and a worse-than-expected reading for France dragged down Markit’s composite PMI reading for the euro area to 51.5 -- well below expectations.
• The data comes as the European Central Bank governing council meet to make their monetary policy decision, announced tomorrow. U.S. PMI data is due at 9:45 a.m. Eastern Time. 

(Source: Bloomberg)

• The Bank of Jamaica yesterday intervened in the foreign exchange market selling US$20Mn to authorized dealers and large cambios through its B-FXITT flash sale tool.
• The central bank noted that this move was warranted to address temporary demand and supply imbalances in the foreign exchange market.
• Last week the BOJ also intervened with a US$30Mn injection into the FX market under similar circumstances.

(Source: Bank of Jamaica)

• Fitch Ratings has assigned a 'BBB' rating to Panama's USD1.25 billion bonds maturing 2030 and to the USD750 million bonds maturing 2060.
• The bonds maturing 2030 carry a coupon of 3.16%. The bonds maturing 2060 carry a coupon of 3.87%.  Proceeds from the issuance will be used for general budgetary purposes.
• The bond ratings are in line with Panama's Long-Term Foreign-Currency Issuer Default Rating (IDR) of 'BBB'. 
• The bonds are sensitive to any change in Panama's Long-Term Foreign-Currency IDR. Fitch affirmed Panama's Long-Term Foreign-Currency IDR at 'BBB'/Stable Outlook on Feb. 13, 2019.

(Source: Fitch)

• Bermuda is expected to recover from a minor recession in 2018, powered by solid growth in the insurance and tourism industries.
• The forecast is that Bermuda will experience real GDP growth of 1.1% y-o-y in 2019 and 1.0% in 2020, after economic activity contracted by less than 0.1% in 2018.
• Risks to the forecast are weighted to the downside, as an uptick in natural disasters could damage profitability in the insurance industry and a slowing global economy could weigh on tourism.

(Source: Fitch)

• There was some confusion yesterday when markets interpreted a speech by Federal Reserve Bank of New York President John Williams in which he said central banks should move quickly when they see signs of trouble as referring to upcoming policy actions.
• A New York Fed spokeswoman later clarified that Williams’s prepared remarks were “an academic speech on 20 years of research” rather than a short-term signal.
• Whatever Williams meant to say, there is no getting away from market expectations of a cut at the next meeting -- it’s just the magnitude that’s still under debate.
• Meanwhile, the European Central Bank is expected to signal further easing at its meeting next week.

(Source: Bloomberg)     

• Boris Johnson has not even entered Number 10 Downing Street as Britain’s prime minister and already he is facing a battle to keep the government he hopes to lead alive.
• If, as expected, Johnson is named Conservative leader on Tuesday and becomes prime minister on Wednesday, he will inherit a country in crisis and a governing party so divided that some members fear it could break apart.
• While Johnson’s allies prepare for a fight, one minister threatened to try to topple the next administration rather than allow the new premier to take Britain out of the EU without a deal.
• Hammond said he would be “very cautious” about backing a motion of no confidence in his own party’s administration -- but did not rule it out. If such a motion were passed, it would put Britain on course for a general election.

(Source: Bloomberg