Moody's downgraded its credit rating on Mexico to Baa1, and joined Fitch Ratings with a cut to the Mexican state-owned oil company Pemex's rating as well, with both companies on Friday citing weak economic growth prospects and sharp drops in the price of oil.
Moody's cut Pemex to junk status, lowering the rating to Ba2 from an investment grade Baa3. Meanwhile, Fitch cut the company further into junk status, dropping the rating to BB- from BB.
Moody's maintained negative outlooks on both the sovereign and Pemex. It said Mexico's medium term economic growth prospects have materially weakened and that the "continued deterioration in Pemex's financial and operational standing is eroding the sovereign's fiscal strength, which is already pressured by slower revenue growth due to a weaker economy."
West Texas Intermediate crude futures for May delivery reversed gains to trade in negative territory again on Tuesday, one day after plunging below zero for the first time in history. The contract expires today, which means that thin trading volume has contributed to the wild price action.
The massive selling gripping the oil market is now spreading to more futures contracts, worrying investors about the deep economic damage being done by the coronavirus shutdowns.
The contract for June delivery, which is the more actively traded and therefore a better indication of how Wall Street views the price of oil, slipped more than 20% to $16.24 per barrel. Earlier in the session it had dipped below $15. The contract for July delivery fell roughly 11% to $23.42.
Treasury yields fell on Tuesday as a stunning drop in oil prices raised concern about the global economy. The U.S. 10-year rate fell to 0.55%, hitting its lowest level since March. The 2-year yield traded at 0.189% while the 30-year bond yielded 1.129%. Yields move inversely to prices.
Tuesday’s decline in yields comes after U.S. oil prices tumbled below zero for the first time on record, with crude storage facilities filling rapidly and as the coronavirus crisis ravages demand.
On April 16, 2020, S&P Global Ratings revised its outlook on Jamaica to negative from stable. At the same time, S&P Global Ratings affirmed its 'B+/B' long-term and short-term foreign and local currency sovereign credit ratings.
The COVID-19 pandemic will temporarily halt economic growth and fiscal progress in Jamaica, putting pressure on the country's external accounts and government finances.
It is expected that the pandemic-related decline in tourism and other sectors will have a negative impact on the country's revenues, which together with government spending, will result in a fiscal deficit in the current year.
The negative outlook reflects the risks that the effects of the COVID-19 outbreak will be more severe or prolonged than we currently expect, leading to a sustained fiscal deficit or more strained external accounts.
The Statistical Institute of Jamaica (STATIN) is reporting that the country’s unemployment rate remains at an impressive low of 7.3%, based on the January 2020 Labour Force Survey.
Director General, Carol Coy, says the out-turn is 0.7% lower than the rate of 8.0% recorded in January 2019, and just 0.1% above the out-turn for the October 2019 survey.
The number of employed females rose by 19,600 or 3.5% to 578,800, while the figure for males climbed by 16,800 persons or 2.5% to 690,300.
The overall labour force jumped by 29,300 persons or 2.2% to 1,369,500 persons, with the number of males increasing by 16,700 to 733,700, and the female complement moving by 12,600 to 635,800.
The Executive Board of the International Monetary Fund (IMF) approved an emergency request for the disbursement of $ 515 million to Panama to help the country meet its urgent balance of payments needs stemming from the fight against the COVID-19 pandemic.
This was announced this Thursday by the institution in a statement in which it explained that the approval of the loan to Panama was carried out through the Rapid Financing window (IFR).
The IMF affirmed that Panama has been forced to request this emergency financial assistance since the virus, which until Wednesday had caused 3,751 infections and 103 deaths in the country, has hit the Panamanian economy and caused an increase in the budget deficit.
Mexican Finance Minister Arturo Herrera said on Thursday that he is “very concerned” about the country’s ratings downgrade but added that the decision is understandable under the current circumstances.
Fitch Ratings on Wednesday downgraded Mexico’s sovereign rating to one notch above speculative grade, or “junk”, on fears that the economic shock caused by the novel coronavirus will cause a “severe recession” this year.
Mexico’s economy had already tipped into recession in 2019 and the coronavirus, which causes a respiratory illness called COVID-19, has stoked fears of an even sharper downturn this year.
China reported that its first quarter GDP contracted by 6.8% in 2020 from a year ago as the world’s second largest economy took a huge hit from the coronavirus outbreak, data from the National Bureau of Statistics of China showed.
Analysts polled by Reuters had predicted China’s GDP would shrink by 6.5% in the January to March quarter, compared to a year ago. The forecasts from 57 analysts polled ranged from a 28.9% contraction to a 4% expansion. China’s economy grew 6% in the previous quarter, from September to December 2019.
The country is facing tremendous pressure amid increasing uncertainties and instabilities from the coronavirus outbreak, said the statistics bureau. The country is also facing new difficulties and challenges in resuming work and production.
Oil prices rose on Friday with Brent gaining nearly 3% after President Donald Trump laid out guidelines on reviving a U.S. economy ravaged by the coronavirus pandemic that has punched a huge hole in global demand for crude and refined products.
Brent was up by 75 cents, or 2.7%, at $28.57 a barrel by 0058 GMT, while U.S. crude CLc1 for May delivery, which expires on April 21, was up 1 cent, or 0.1%, at $19.88 a barrel. The more active June contract was up $1.1, or 4.3%, at $26.63.
Trump laid out a three-stage process for ending lockdowns to stop the spread of the coronavirus that has now killed more than 32,000 Americans and nearly 140,000 worldwide, while some other countries were also relaxing restrictions.
The All Jamaica Consumer Price Index recorded a negative movement of 0.3% for March 2020.The main contributor to this movement in March was the 1.8% reduction in the index for the ‘Housing, Water, and Electricity, Gas and Other Fuels’ division. This movement was due to lower rates for electricity which resulted in a 3.7% fall in the group ‘Electricity, Gas and Other Fuels’.
However, higher water rates tempered the downward movement of the index for the division as reported in the 1.7% increase in the group ‘Water Supply and Miscellaneous Services Related to the Dwelling’.
The heaviest weighted division ‘Food and Non-Alcoholic Beverages’ also recorded a decline in its index, falling 0.2%. The overall rate of inflation was however moderated by a 0.5% increase in the index for the ‘Transport’ division, due mostly to higher petrol prices.
For the review period, the point-to-point inflation was 4.8%, the fiscal year-to-date was 4.8% and the calendar year-to-date inflation rate was -0.7%.
