• Oil prices jumped on Wednesday, as a large increase in U.S. crude inventories failed to soothe worries about tight global supply, with major oil traders expected to shun Russian barrels. 
• Brent crude settled up $4.14, or 4%, to $108.78. U.S. West Texas Intermediate (WTI) crude futures ended up $3.65, or 3.7%, to $104.25. 
• The gains came a day after both benchmarks climbed more than 6%. The oil market has swung wildly as end-users and traders have tried to quantify the disruption in Russia's daily exports following its invasion of Ukraine. Most estimates range from 1.0Mn to 3.0Mn barrels per day. 
• On Tuesday, the International Energy Agency (IEA) lowered expectations for worldwide demand and said rising global production could offset Russian oil output losses. The IEA said it expects Russian output to drop 1.5Mn bpd in April, growing to close to 3.0Mn bpd from May. 
• The White House is releasing 180.0Mn barrels from U.S. reserves over six months, part of a release of 240.0Mn barrels from members of the International Energy Agency. U.S. production is expected to keep rising from 11.8Mn bpd now to about 12.0Mn in 2022. 

(Source: Reuters)

• Prices for wind and solar power in major global markets have climbed nearly 30% in a year as developers have struggled with chaotic supply chains and surging costs for everything from shipping to parts to labour, according to a report published on Wednesday. 
• Contract prices for renewables jumped 28.5% in North America and 27.5% in Europe in the last year, according to a quarterly index by LevelTen Energy that tracks the deals, known in the industry as power purchase agreements (PPAs). LevelTen noted that in the first quarter alone, prices rose 9.7% in North America and 8.6% in Europe. 
• Economic, logistical and labour market disruptions during the coronavirus pandemic have worsened since the Russian invasion of Ukraine, reversing a decade of cost declines for the renewable energy sector. 
• There is a risk higher costs could slow demand growth at a time when the United Nations has called for clean energy to expand more rapidly to avoid the worst effects of a warming climate.

(Source: Reuters)

• For the month of March, the All-Jamaica Consumer Price Index (CPI) increased by 1.6%. March’s outturn meant that point-to-point inflation was 11.3% for the 12 months to March 2022, up from the 10.7% reported in February 2022. This puts inflation outside the BOJ’s target range of 4% to 6%, for the 8^th consecutive month. 
• For the month of March, the rise in inflation was largely driven by the 1.9% increase in the index for the ‘Food and Non-Alcoholic Beverages’ division, especially the ‘Food’ sub-group. This was impacted by higher prices for tomato, cabbage, onion and sweet pepper. 
• Also contributing to the higher inflation rate was the 3.9% upward movement in the division for ‘Housing, Water, Electricity Gas and Other Fuels’, and 0.6% increase in the ‘Transport’ division. This was caused by higher electricity rates, and fuel and lubricant prices, respectively. 
• The current breach in the inflation range is in-keeping with expectations, as the BOJ noted on February 18, 2022, that inflation was projected to successively breach the target for the next 8 to 10 months. The elevated rates will likely be driven by the continued transmission of higher international commodity and shipping prices to domestic processed food, food-related services, and energy price inflation, as well as a recovery in domestic demand. 
• The BOJ has already increased its policy rate to 4.50% as of March 29. It is expected that it will apply an additional rate increase at its next policy decision meeting on May 29^th. This decision will likely be driven by the sustained expectations for future breaches of the target, expectations around aggressive Fed Fund rate hikes, and the still-elevated inflation expectations for the 12 months ahead, which rose to 9.1% in the December Survey from 8.9% in the prior survey.

(Source: Statin and NCBCM Research

• Fitch expects that rising borrowing costs, slowing economic growth and political uncertainty will limit the growth of Brazil’s banking sector. In 2021, Brazilian banks saw robust loan growth, climbing to 18.6% y-o-y and a record 71.4% of GDP at the end of the year.  
• This continued the trend from 2020, as loan growth was fueled by fiscal stimulus in response to the Covid-19 pandemic and loose monetary policy through H1 2022, which supported lending to firms and households to cover income losses. Additionally, total assets posted 9.2% growth, while deposits expanded by 9.5%. 
• That being said, inflation is expected to average 10.1% by the end of the year, and interest rate hikes are expected. Owing to this, loan growth in Brazil’s banking sector is anticipated to decelerate in 2022, held back by higher interest rates, a weak economic outlook, and political uncertainty ahead of the October 2022 election. Against this, Fitch forecasts loan growth will slow from 18.6% at the end of 2021 to 7.9% at end of 2022.

(Source: Fitch Solutions)

• Just before fuel prices are due to increase in Trinidad and Tobago, the Central Statistical Office (CSO) reported that the prices of food and non-alcoholic beverages increased by 8.63% between February 2021 and February 2022. 
• The food and non-alcoholic beverage category, which is most important to a significant percentage of the population, contributes 17.3% to the overall consumer price index. 
• The rise in prices was significantly impacted by the general upward movement in the prices of white flour; snacks-fried, baked, or roasted; parboiled rice; carrots; Crix; other chilled or frozen chicken; whole chickens-frozen; full cream milk; and Milo. 
• However, the full impact of these price increases was offset by the general decrease in the prices of tomatoes; pumpkin; hot peppers; chive; powdered milk; full cream; potatoes; celery; green (sweet) pepper; mixed fresh seasoning, and sweet potatoes. 
• It is expected that inflation will remain elevated as production and food prices continue to be impacted by the commodity price shocks caused by the geopolitical crisis. While the Central Bank of Trinidad and Tobago has not raised its policy rate as yet, elevated inflation and the Federal Reserve’s aggressive policy stance may force the CBTT to follow suit with rate increases to support its currency peg, by maintaining an attractive TT-USD interest rate differential and prevent capital flight.

(Source: Trinidad Express Newspapers)

• The International Monetary Fund on Tuesday slashed its forecast for global economic growth by nearly a full percentage point, citing Russia's war in Ukraine, and warning that inflation was now a "clear and present danger" for many countries. 
• The war is expected to further increase inflation, the IMF said in its latest World Economic Outlook, warning that a further tightening of Western sanctions on Russia to target energy exports would cause another major drop in global output. 
• The IMF said other risks to the outlook include a sharper-than-expected deceleration in China prompted by a flare-up of COVID-19 lockdowns. Rising prices for food, energy, and other goods could trigger social unrest, particularly in vulnerable developing countries, the IMF said. 
• Downgrading its forecasts for the second time this year, the global crisis lender said it now projects global growth of 3.6% in both 2022 and 2023, a drop of 0.8 and 0.2 percentage point, respectively, from its January forecast due to the war's direct impacts on Russia and Ukraine and global spillovers. 
• Medium-term global growth is expected to decline to about 3.3% over the medium-term, compared to an average of 4.1% in the period from 2004 to 2013, and growth of 6.1% in 2021.

(Source: Reuters)

•  U.S. homebuilding unexpectedly rose in March, but starts for single-family housing tumbled amid rising mortgage rates. Housing starts increased 0.3% to a seasonally adjusted annual rate of 1.793Mn units last month, the Commerce Department said on Tuesday. Data for February was revised higher to a rate of 1.788Mn units from the previously reported 1.769Mn units. 
• The 30-year fixed-rate mortgage averaged 5.0% during the week ended April 14, the highest since February 2011, up from 4.72% in the prior week, according to data from mortgage finance agency Freddie Mac. Further increases are likely with the Federal Reserve adopting an aggressive monetary policy posture as it battles sky-high inflation. 
• The Fed in March raised its policy interest rate by 25 basis points, the first hike in more than three years. Economists expect the U.S. central bank will hike rates by 50 basis points next month, and soon start trimming its asset portfolio. 
• Rising borrowing costs are combining with higher home prices to reduce housing affordability for first-time buyers. The National Association of Home Builders/Wells Fargo Housing Market index dropped to a seven-month low in April, with builders blaming the “jump in mortgage rates and persistent supply chain disruptions.” 
• Still, record low housing supply should continue to underpin homebuilding this year. There is a record backlog of houses approved for construction that are yet to be started.

(Source: CNBC News)

• Knutsford Express Services Limited (KEX) reported a net profit of $45.40Mn for its nine months ending February 28, 2022, which is a significant turnaround from the $60.64Mn net loss recorded last year. 
• Much of the improvement in KEX’s net profit is attributed to the ongoing global recovery in travel which has led to a strong rebound in revenues. Revenues grew by 69.7% moving from $456.37Mn to $774.41Mn. 
• KEX’s financial performance is expected to improve in line with the recovery in the tourism sector, and the full withdrawal of restrictions on movement which will support domestic travel. 
• However, the current rise in fuel costs is expected to be a significant headwind for KEX as this may have a negative impact on its margins. Despite this, management sees this as an opportunity to increase its ridership as motorists may choose to enjoy the cost savings associated with traveling across the country by utilising KEX’s services. 
• KEX’s stock price has declined by 4.6% since the start of the calendar year. The stock closed Thursday’s trading session at $7.93 and currently trades at a P/B of 5.5x which is above the Junior Market Sector Average of 5.3x.

(Source: Company Financials and NCBCM Research)

• Fitch Solutions will be monitoring February economic activity prints for Argentina, Brazil, and Colombia for an indication of the strength of the region’s economy prior to the economic shock caused by Russia’s invasion of Ukraine on February 24. 
• Growth in these markets steadily slowed over H2 2021 and into 2022, as in much of the rest of Latin America. In January, activity contracted in seasonally-adjusted month-on-month terms in each market, while also slowing sharply in year-on-year terms as base effects became less favourable. 
• Activity in Brazil is expected to be higher in February than in January (-1.9% y-o-y and 0.8% m-o-m). This view reflects high-frequency data which generally showed an improvement in the second month of the year. However, it is forecasted that Brazil will see only 0.7% real GDP growth in 2022, given high inflation and significant political uncertainty. 
• After Mexico’s inflation came in above expectations in the second half of March at 7.62% y-o-y (0.59% m-o-m), reflecting the impact of higher commodity prices, Fitch expects inflation will remain comfortably above 7.00% in the first half of April. However, core inflation, which reached 6.88% in the second half of March, is also likely to continue climbing, adding more pressure on the Banco de México to hike from 6.50% in the months ahead.

(Source: Fitch Solutions)

• Even though the Dominican Republic reported economic growth of more than 12%, cutting the budget and current expenses will be vital to face the rise in inflation, which started this year at 8.5%. 
• The increase in the monetary policy interest rate above the pre-pandemic level was the first measure implemented by the Central Bank of the Dominican Republic (BCRD) to face the increase in inflation. However, while higher inflation was expected to be transitory, a sustained rise in food prices, construction materials, and other goods and services, indicates that it will likely last until the end of the first half of this year. 
• The Dominican Association of Multiple Banks (ABA) has outlined that a significant proportion of small and medium-sized borrowers from productive sectors will not suffer as much from the increase in interest rates since many are covered by monetary stimuli arranged as a result of the pandemic. 
• Notably, after the health crisis broke out in 2020, the government made it easier to grant loans at fixed rates of 8% until July 2023. This will allow the country to overcome the transition to a path of sustained growth with adequate levels of inflation without major traumas.

(Source: Dominican Today)