• U.S policymakers need to consider major changes to make money market funds less vulnerable to investor runs, a working group led by the Treasury Department said on Tuesday, stopping short of making specific recommendations.
• The group laid out several potential changes to those markets, in which the U.S. government intervened to stabilize after big outflows prompted by the coronavirus outbreak in March.
• Ideas included setting stricter rules around fund redemptions, or higher capital buffers for such funds, but the group said it was not favoring any specific approach.
• The report could kick off a broader effort to overhaul money market funds. Former Federal Reserve Chair and incoming Treasury Secretary Janet Yellen are expected to review so-called "shadow banking," which includes such funds.

(Source: Reuters)

• The Economic Programme Oversight Committee met on December 4, 2020, to review the macro-fiscal program of the GOJ for 2020/21FY.
• Based on the reports presented by the Ministry of Finance and the Bank of Jamaica, the GOJ and the BOJ is on track to meet all quantitative targets under the GOJ Economic Reform Programme (ERP) as at the end of September 2020.
• With tax revenues, year to date is 17.6% behind the same period last year and as GDP growth projections are revised downwards, the MOF continues to project that Revenues and Grants for the last quarter of FY2020/21 will be 3.7% higher than the outturn for the corresponding quarter of FY2019/20 and is cautiously optimistic that this target will be achieved.
• The GOJ however remains committed to achieving the downward revised 3.1% primary balance target which could involve a reallocation and reduction of expenditures to achieve the said target

(Source: EPOC)

• An independent evaluation of prospective resources offshore Jamaica prepared by Gaffney Cline & Associates (Gaffney Cline) shows that there is potential for more than 2.4 billion barrels of oil across 11 prospects and leads covering the Walton Morant license. This license is now held 100% by United Oil & Gas, a U.K.-based oil and gas company.
• “United has long held the view that the Walton Morant Basin is a highly prospective and exciting basin, with billion-barrel potential,” said Jonathan Leather, Chief Operating Officer of United Oil and Gas. “This is the second independent report on the license and the first to explore prospects across the full basin.”
• He said results from the report will help the company move towards reaching the goal of being in a position to drill the first exploration well offshore Jamaica for over 40 years.

(Source: Oil Now)

• The Mexican peso (MXN) will appreciate against the US dollar over the near term, driven by optimism around the global economy and its carry trade value.
• Over the longer term, the agency expects the currency will weaken against the US dollar, weighed down by relatively weak economic fundamentals and more dovish monetary policy.
• Fitch Solutions forecasts an average exchange rate of MXN20.70/USD in 2021, down from previous forecast of MXN21.65/USD, with the exchange rate ending the year at MXN21.30/USD.

(Source: Fitch Solutions)

• The Banco Central de Costa Rica (BCCR) will maintain a dovish monetary policy stance in 2021, aided by low domestic inflation and sustained global central bank dovishness.
• In addition, the government’s limited fiscal capacity will leave monetary policy as the primary driver for Costa Rica’s economic recovery in the coming quarters.
• Fitch Solutions forecasts the BCCR will hold its benchmark interest rate at 0.75% through end-2021, and expect inflation will average 1.8% y-o-y in 2021.

(Source: Fitch Solutions)

• Oil hit a nine-month high on Thursday after government data showed a fall in U.S. crude stockpiles last week, while progress towards a U.S. fiscal stimulus deal and strong Asian demand also buoyed prices.
• Brent crude futures rose 45 cents, or 0.9%, to $51.53 a barrel, while U.S. West Texas Intermediate (WTI) crude futures rose by 46 cents, or nearly 1%, to $48.28 a barrel. Both benchmarks hit their highest since early March.
• U.S crude inventories fell by 3.1 million barrels in the week to Dec. 11, the Energy Information Administration said, more than analysts' expectations of a 1.9-million-barrel drop.
• Also boosting oil prices, U.S. lawmakers edged closer to an agreement on a $900Bn virus-relief spending package on Wednesday with top Democrats and Republicans sounding more positive than they have in months about getting something done.

(Source: Reuters)

• The United States is hopeful of sealing a mini-trade deal with the United Kingdom to reduce tariffs, President Donald Trump's trade chief, Robert Lighthizer, told the BBC.
• Lighthizer said he was hopeful for a deal that could see punitive tariffs on Scottish whisky lowered.
• He also suggested the UK would need to go further than last week's announcement breaking with the EU's support of European planemaker Airbus.
• Britain will suspend retaliatory tariffs imposed on U.S. goods as part of a dispute over aircraft subsidies from Jan. 1, the first step to diverging from European Union trade policy.

(Source: Reuters)

• The Producer Price Index for the Mining and Quarrying industry increased by 3.8% while the index for the manufacturing industry decreased by 0.3% for October 2020.
• The movement in the index for the Mining and Quarrying industry was influenced mainly by a 4.0% increase in the index for the major group ‘Bauxite Mining & Alumina Processing’.
• The main contributor to the decline in the index for the Manufacturing industry was the major group, ‘Refined Petroleum Products’ which fell by 4.3%. However, increases in the index for the major groups, ‘Food, Beverages & Tobacco’ (0.7%) and ‘Chemicals and Chemical Products’ (0.1%) tempered the decline of the index for the industry.
• The point-to-point index declined by 2.6% for the Mining & Quarrying industry and increased by 0.9% for the Manufacturing industry.

(Source: STATIN)

• BOJ’s October 2020 survey indicated expected inflation of 6.3% for the calendar year 2020, which is higher than the October 2020 CPI outturn of 5.0%. The expected inflation 12 months ahead decreased to 6.7% relative to the previous survey outturn of 7.0%.
• The perception of inflation control declined slightly in the October 2020 survey relative to the September 2020 survey.
• The majority of respondents continued to believe that the Bank’s policy rate will remain the same over the next three months.
• The Present Business Conditions Index reflected a lower level of optimism while the Future Business Conditions Index illustrated a sharp increase in optimism compared to the previous survey.

(Source: BOJ)

• Fitch Solutions has revised its forecast for Panama’s real GDP growth to -13.2% and 7.9% y-o-y in 2020 and 2021, from -8.9% and 4.8% previously, as severe mobility restrictions caused the region’s deepest contraction in Q220.
• While the government has begun to phase out many public health restrictions, limited fiscal support suggests a sluggish recovery over the coming quarters.
• Over the medium-term, however, the agency maintains an upbeat growth forecast for Panama, as a robust private sector, supportive international trade trends, and major infrastructure investments will drive sustained growth.

(Source: Fitch Solutions)