• Food manufacturing and distribution company Seprod received shareholder approval to increase the company’s authorised shares but remains tight-lipped on when the new capital will be deployed and for what purpose.
• The company's share capital will increase from 780Mn shares to 1Bn, creating 220Mn additional units.
• The food manufacturing and distribution company is valued at over $50Bn and almost 750Mn of its shares are issued and listed on the Jamaica Stock Exchange.
• Seprod has said that the new shares would be listed after they are deployed, but no information on when or how the transaction will be structured has been provided.

(Source: RJR News)

• Fitch Solutions believes that the Barbadian authorities will proceed with fiscal restraint in the coming quarters, but will avoid major cuts to components like subsidies and the wage bill that are sensitive to social discontent.
• Barbados entered an IMF-backed reform programme in December 2022 that consists of a 36-month, USD189.0Mn Extended Fund Facility (EFF) and US11.3Mn Resilience and Sustainability Facility (RSF) to help the market cope with a series of recent shocks including the COVID-19 pandemic and natural disasters.
• More recent data shows that in H123, the government managed to record a primary surplus (1.2% of GDP) despite stable growth in the wages & salaries and transfers & subsidies components of spending. This is broadly in line with the government’s decision to raise the salaries of civil servants by 3.0% in FY2023/24 and FY2024/25. The government has also raised the personal tax allowance by 12.5% in the FY2023/24 budget, suggesting that while the government is committed to fiscal consolidation, it is avoiding major changes to more politically sensitive components of fiscal policy.
• This, coupled with a high degree of policy continuity and peaceful relations with neighbouring countries means that Barbados will stay among the most politically stable markets in the region.

(Source: Fitch Solutions)

• Total visitor arrivals to The Bahamas reached 6.6 million in August, according to the latest data from the Central Bank. The Central Bank, in its Monthly Economic and Financial Development report for August, noted total arrivals from January to August were up 53.5% from January to August in 2022.
• Official data provided by the Ministry of Tourism (MOT) revealed that total visitor arrivals expanded to 0.74Mn in August from 0.62Mn in the corresponding period of 2022. Arrivals by sea rose to 0.62Mn from 0.50Mn passengers in the prior year. In addition, air traffic improved moderately to 0.13Mn —representing 98% of the pre-pandemic high that was registered in 2019.
• In the short-term vacation rental market, data provided by AirDNA also reflected positive trends during August. Specifically, total room nights sold rose to 161,513 from 140,512 in the comparative 2022 period.
• The tourism sector is still anticipated to be the main growth driver for the Bahamas, with arrivals set to be supported by a further recovery in global travel from the main impacts of the COVID-19 pandemic.
• Nonetheless, the Bahamas is forecast to see 4.0% real GDP growth in 2023, down from an estimated 8.1% in 2022 as strong base effects fade and global growth slows. The country is also expected to register elevated inflation, which will weigh on real household disposable incomes.

(Source: Eyewitness News & Fitch Solutions)

• The 10-year Treasury yield, which serves as a benchmark for mortgage rates and as an investor confidence barometer, on Tuesday surged to its highest level since 2007. The 10-year Treasury yield was last up about 8 basis points to 4.758%. The 30-year Treasury yield rose as high as 4.874%, also the highest since 2007. The 2-year Treasury yield, which is sensitive to expectations around where the Federal Reserve will set its key borrowing rate, increased slightly to 5.129%.
• Speaking Monday, Fed Vice Chair for Supervision Michael Barr said it’s less important to focus on another hike and more critical to understand that rates likely will remain elevated “for some time.” And Cleveland Fed President Loretta Mester, a nonvoter this year on the FOMC, said “We may well need to raise the fed funds rate once more this year and then hold it there for some time.”
• Market uncertainty remains about when and whether a rate increase may be implemented. Two central bank policy meetings remain this year, Oct. 31-Nov. 1 and Dec. 12-13. Market pricing Tuesday morning was pointing to just a 25.7% chance of a hike on Nov. 1, but a nearly 45% probability in December, according to futures pricing measured in the CME Group’s FedWatch Tool.
• Rising yields come even though U.S. lawmakers were able to avoid a government shutdown as they passed a last-minute spending bill on Saturday night. That has bought them time to finish the necessary government funding legislation. A shutdown could have negatively affected the U.S. credit rating as well as the country’s economy.
• The jump in rates has rekindled talk about market “bond vigilantes,” a term coined by economist Ed Yardeni to describe the impact when fixed-income investors leave the market because of worries over U.S. debt. Persistently high fiscal deficits are one factor in the rising costs of borrowing. Public debt has risen past $32.3 trillion this year. Debt has risen to nearly 120% of total gross domestic product.
• “The worry is that the escalating federal budget deficit will create more supply of bonds than demand can meet, requiring higher yields to clear the market; that worry has been the Bond Vigilantes’ entrance cue,” Yardeni wrote Tuesday morning in a note titled “The Bond Vigilantes Are On The March.”

(Source: Reuters)

• Employment vacancies at U.S. businesses unexpectedly surged in August, a sign that the labour market remains tight and robust. Job openings totalled 9.61Mn for the month, a jump of nearly 700,000 from July and well above the Dow Jones estimate for 8.8Mn, the Labour Department said Tuesday in its monthly Job Openings and Labour Turnover Survey.
• Hires, however, rose only modestly, moving up to 5.857Mn, an increase of just 35,000. Much of the increase in openings came in professional and business services, which showed a burst of 509,000.
• Stocks fell following the report as a tighter labour market could put more pressure on the Fed to keep interest rates elevated. The Dow Jones Industrial Average most recently was off more than 260 points in the session.
• Openings had been on the decline for the last several months, indicating that the central bank’s interest rate hikes were beginning to have an impact on a labour market that had been hit by a large supply-demand mismatch in which openings had outnumbered available workers 2 to 1. The ratio now is down to 1.5 to 1, following an increase of workers classified as unemployed in August.

(Source: CNBC)

• For August 2023, output prices for producers in the Mining and Quarrying industry increased negligibly while prices in the Manufacturing industry increased by 1.9% as reported by the Statistical Institute of Jamaica (STATIN).
• The negligible movement in the Mining and Quarrying industry was attributed to the stability of the exchange rate during the period. The index for the major groups ‘Bauxite Mining & Alumina Processing’ and ‘Other Mining & Quarrying’ each registered negligible changes in their respective indices.
• An increase of 10.8% in the index for the major group ‘Refined Petroleum Products’, due mainly to increased fuel prices on the international market, was the main contributor to the 1.9% increase in the Manufacturing industry. The index for the heaviest weighted major group within the industry, ‘Food, Beverages & Tobacco’, had a negligible change. This was largely due to a combination of factors, including a stable Jamaican dollar relative to the United States dollar and the relatively stable prices for inputs used by manufacturers.
• For the period August 2022 - August 2023, the index for the Mining and quarrying industry increased by 6.3%. This was a result of a similar 6.3% rise in the index for the major group 'Bauxite & Alumina Processing’. For the same period, the index for the Manufacturing industry increased by 0.4%. This was mainly due to an increase of 2.6% in the index for the major group ‘Food, Beverages & Tobacco’. The industry’s increase was tempered by a 9.0% decline in the index for ‘Refined Petroleum Products’.
• The Producer Price Index (PPI) is a significant economic indicator that tracks the average fluctuation in selling prices that domestic producers of goods and services experience over time. While there was a minor dip in the PPI in June, the PPI for August inched up marginally for both manufacturing and mining & quarrying. The decision by OPEC+ to curtail oil supply is a likely explanation for the increase and could cause a further escalation in producer prices given that reduced oil supply has the potential to drive up costs in key areas in the economy.

(Sources: STATIN & NCBCM Research)

• The Jamaican economy grew by 2.3% during the second quarter of 2023 when compared to the second quarter of 2022. This resulted from growth in the Services and Goods Producing Industries of 2.2% and 2.6%, respectively. This performance reflected the continued recovery of the economy from the COVID-19 pandemic.
• All industries within the Services Industries grew, except for Wholesale & Retail Trade; Repairs; Installation of Machinery & Equipment and Producers of Government Services which both declined by 0.1%. Higher levels of activity were recorded for Transport, Storage and communication (5.6%), Hotels and restaurants (7.8%), Electricity and Water Supply (6.2%), Other Services (2.2%), Finance & Insurance Services (2.1%) and Real Estate, Renting & Business Activities (1.8%).
• The increase in the Goods Producing Industries was due to growth in Mining and quarrying (164.2%) and Manufacturing (3.1%). However, value added for the Agriculture, Forestry & Fishing and Construction industries declined by 8.1% and 0.7% respectively. Agriculture was impacted by continued drought conditions that significantly reduced yields and delayed the land preparation and planting of domestic crops while lower expenditure on the South Coast Highway Improvement Project impacted construction activity.
• The growth in the Mining and quarrying industry was largely due to higher output of alumina due to increased production at the JAMALCO plant which was closed in the similar period of 2022. The Manufacturing industry grew by 3.1% as a result of increased production in the Food, Beverages & Tobacco and Other Manufacturing sub-industries of 4.6% and 0.7%, respectively.

(Sources: STATIN & NCBCM Research)

• The Trinidad and Tobago economy grew by three per cent in the first quarter of this year, fuelled by the 'strong expansion' in the non-energy sector along with 'marginal growth' in the energy sector, the Central Bank reported.
• 'Data from the Central Statistical Office (CSO) indicate that real GDP grew by 3.0% (year-on-year) in the first quarter of 2023 reflecting strong expansion in the non-energy sector (4.2%) accompanied by marginal growth in the energy sector (0.3%),' the Central Banks stated in its Monetary Policy Announcement last Friday.
• In the second quarter of 2023, indicators monitored by the Central Bank point to a steady rise in activity in major non-energy sectors including transportation and storage, wholesale and retail trade (excluding energy), electricity and water (excluding gas) and construction.
• The unemployment rate also increased slightly to 4.9% in the first quarter of 2023 from 4.7% in the fourth quarter of 2022, it stated. Headline inflation eased further in August to 4.1% (year-on-year), down from 4.7% recorded in July, the Central Bank stated.
• It was also reported that the buoyancy in private sector credit, alongside the sustained deceleration in inflation, was helping to foster a steady revival of economic activity without demand pressures at this time.
• Considering all factors, the MPC agreed to hold the repo rate at its current level of 3.50%. The Central Bank will continue to carefully monitor and analyse international and domestic developments and will take further actions as necessary.

(Source: Trinidad Express Newspaper)

• Annual inflation in Peru decelerated to 5.04% in September to hit its lowest level in more than two years, according to official figures published on Sunday, though consumer prices remained some way above the central bank's target rate.
• Data from the national statistics agency INEI (National Institute of Statistics and Informatics) showed the key index based on the metropolitan region of Lima slowed to its lowest level since August 2021, when it stood at 4.95%.
• On a month-to-month basis the Lima Consumer Price Index, Peru's inflation benchmark, inched up 0.02% in September, well below the 0.38% increase in August. The figures are a boost to Peru's bid to wrestle inflation back to the central bank's official target of 2%, plus or minus one percentage point.
• The monetary authority kept its benchmark interest rate unchanged in August at 7.75% for the seventh month in a row after an aggressive series of hikes started in August 2021, part of its efforts to tame high consumer prices.
• INEI said in a statement that inflation in September was driven by price rises in transportation, restaurants and hotels, and miscellaneous goods and services, which rose 0.56%, 0.43% and 0.32%, respectively.
• The world's second-largest copper producer has been grappling with poor weather, lower private investment in mining and anti-government protests staged earlier this year, which has led the government to slash its forecasts for economic growth to 0.9% from 2.2%. Nonetheless, this easing of prices, if sustained could hint at possible higher growth forecasts in 2024.

(Source: Reuters)

• Japan's business sentiment improved in the third quarter, a central bank survey showed, suggesting conditions for a durable economic revival are falling into place even as a global slowdown keeps policymakers cautious about the outlook.
• The big non-manufacturers mood brightened to levels unseen since 1991 when Japan was experiencing an asset-inflation bubble, a sign retailers were benefitting from a rebound in consumption after dismantling pandemic curbs. Companies also retained their robust spending plans and faced a tight labour market, the survey showed, suggesting that conditions for the Bank of Japan to phase out its massive stimulus could fall into place.
• The headline big manufacturers' confidence index rose to 9 in September from 5 in June, the BOJ's closely-watched "tankan" survey showed, exceeding market forecasts for a reading of 6 and marking the second straight quarter of improvement. The Big non-manufacturers index stood at 27, up from 23, the survey showed, above a median market forecast of 24 and improving for the sixth straight quarter. It was the highest reading since November 1991.
• "The stronger-than-expected improvement in the latest tankan survey suggests that the economy will continue to expand at an above-trend pace, which is contributing to mounting staff shortages and persistent price pressures," said Marcel Thieliant, head of Asia-Pacific at Capital Economics. Many big companies said they could pass on higher costs to consumers, leading to improved business mood, a BOJ official told a briefing.
• Corporate earnings and business sentiment will be key to whether wages will keep rising next year in tandem with higher inflation and lay the groundwork for the BOJ to phase out its massive monetary stimulus.

(Source: Reuters)