• Mexican inflation is anticipated to have slowed in August for the seventh straight month, with the closely watched core index expected to return to 2021 levels, a Reuters poll showed on Tuesday, September 5, 2023.
• Inflation levels, however, are expected to remain above the Bank of Mexico's target range, boosting bets that the central bank will continue to hold its key interest rate at the current level to tame rising prices. The median forecast of 10 analysts surveyed was for annual headline inflation to ease to 4.61% in August, which would be the lowest rate since February 2021. 
• Headline inflation surged to a record 8.7% last year due to elevated food and energy prices stemming from geopolitical conflict. Meanwhile, annual core inflation is forecast to have slowed to 6.12%, which would mark its lowest level since December 2021. The closely watched core price index is considered a better gauge of price trends given that it strips out some volatile food and energy prices. 
• The Bank of Mexico, which has a target range for inflation of 3% plus or minus one percentage point, last month voted to keep its benchmark interest rate steady at a historic high of 11.25%, with board members suggesting it will stay at that level for an extended period of time to bring inflation to target. "The discussion of whether we are going to reduce the interest rate is not on the table yet," Bank of Mexico Governor Victoria Rodriguez said during a presentation last month.
• In August alone, consumer prices likely rose 0.52% compared to July, while core inflation is forecast to have risen 0.30%, according to the poll. 
• Mexico's national statistics agency (INEGI) is expected to publish consumer price index data for August on Thursday.

(Source: Reuters)

• Travelers are seeking more affordable destinations in 2023, with personal finance experts advising budgeting and planning according to a recent report by Squaremouth Travel Insurance Company.
• The Dominican Republic ranks fifth among these destinations with an average travel cost of $4,497. While the cost is rising, the country has seen a 14% increase in tourist arrivals from January to July compared to the same period last year.
• Being the most affordable was Colombia (US$3,344) and Mexico (US$3,878). 
• According to the Global Travel Agency, Puerto Rico is currently the cheapest Caribbean island to visit (followed by Bermuda at number 4) costing $3,907 on average. The Bahamas is only 3.5% pricier than the Dominican Republic at $4,658. Jamaica and Aruba followed with costs of $4,698 and $4,917, respectively.
• While Asia is a favoured destination for backpackers, visiting Vietnam and the Philippines averages $5,181 and $5,330, respectively. Expensive destinations have also seen attention, with 21,000 people spending over $133 million on these trips, averaging $11,000.
• Africa emerges as the most expensive continent for tourism. Visiting Congo costs $32,400 per person, compared to Botswana’s $17,753. Other destinations like Antarctica, Zimbabwe, Tanzania, and Kenya also surpass the average $4,000 cost of visiting the Dominican Republic. Additionally, travellers are purchasing travel insurance for an average of $717 to ensure safe journeys.
• The rise in tourism to budget-friendly destinations like the Dominican Republic and Colombia offers significant benefits. Increased tourist arrivals boost local economies, create jobs, and spur infrastructure development. Moreover, this growth elevates their global tourism profile, fostering cultural exchange and attracting potential foreign investments.

(Source: Squaremouth Travel Insurance & CariCris)

• U.S. economic growth was modest amid a cooling labour market and slowing inflation pressures in July and August, a Federal Reserve report published on Wednesday showed, buttressing expectations that the central bank was either done or close to being done, with interest rate increases.
• The U.S. central bank is widely expected to leave its benchmark overnight interest rate in the current 5.25%-5.50% range at the end of its Sept. 19-20 policy meeting, while leaving open the door to a final quarter-percentage-point hike before the end of the year.
• Data since the last Fed rate hike six weeks ago has tended to support that view, with the economy adding an average of 150,000 jobs per month over the last three months, down sharply from the prior three months. Inflation, as gauged by the Fed's preferred measure, was 3.3% in July, down from 7% last summer.
• That's why even a hawkish policymaker like Fed Governor Christopher Waller was able to say that the central bank has time to take in new data before it decides whether it has to raise rates again, or can hold them at current levels.
• Still, prices continue to rise faster than the Fed's 2% goal, employers are adding many more than the monthly 100,000 jobs needed to meet population growth, and economic output appears to be far outpacing the less-than-2% annual growth rate Fed officials say is sustainable in the long run.
• The New York Fed district said migrants were putting strains on the local safety net. The report said "housing affordability, homelessness, and food insecurity continued to challenge communities" in the San Francisco Fed district, adding that "temporary housing shelters and food banks saw increased demand in recent weeks, especially from older adults."
• The report noted that housing remains an issue and that the supply for single-family homes "remained constrained." Home building was picking up, the Fed said, but building affordable properties is being strained by high financing costs and rising insurance premiums.

(Source: Reuters)

• Analysts see Brent crude climbing to levels last seen in the first months of the Ukraine war after Saudi Arabia and Russia extended production cuts. Brent crude oil was trading on Wednesday morning at around $90 a barrel for the second straight day and is up 25% since June thanks to the prospect of more production cuts by leading oil exporters.
• The surge is sending ripples through the global stock and bond markets. The prospect of higher prices at the pump and throughout manufacturing may spur diplomatic efforts to increase supply and tamp down any inflationary effects on the global economy.
• Saudi Arabia and Russia are behind the price increase. The two said on Tuesday that they would extend their oil production cuts — equivalent to a combined 1.3 million barrels a day — through year-end. The duration of the cuts surprised market watchers, as did Saudi Arabia’s hint that it may make even deeper cuts in the coming months.
• There are wild cards to consider. China’s sputtering economy could sap demand for oil, keeping prices down. Costlier oil could also affect interest rates. “Higher oil prices will only increase the likelihood of more fiscal tightening, especially in the U.S., to curtail inflation,” León said.
• Global leaders may seek relief from sanctioned oil exporters. Iran’s oil exports have surged since Saudi Arabia began cutting its production this summer, and Bloomberg reported last week that Tehran and Washington have held back-channel talks to keep crude flowing to make up for supply reductions elsewhere. Venezuela, another exporter under sanctions, has reportedly turned to Beijing to help it revive production.

(Source: NY Times)

• Prime Minister, the Most Hon. Andrew Holness, says Jamaica is poised for sustainable growth and even lower unemployment in the times ahead.
• Addressing residents, business interests, and other stakeholders at a Town Hall meeting at the Harmony Beach Park in Montego Bay, St. James, on August 31, the Prime Minister said it is against this background that he is calling on Jamaicans to maintain optimism and hold steadfast during times of change.
• He highlighted the country’s record low unemployment rate of 4.5%, while emphasizing the importance of remaining positive and focused, based on the progress achieved thus far.
• Jamaica’s unemployment rate has hit an all-time low, signalling the success of various government initiatives and economic policies implemented over the past years. In line with this, Mr. Holness noted that good things are happening in Jamaica by way of sound fiscal policies and the country’s proactive approach to good governance, which are reflective of strides in creating an environment that fosters economic growth and job creation.

(Source: JIS)

• 138 Student Living is looking to raise in excess of J$2 billion via an additional public offer (APO). The company released the prospectus on Friday.
• The offer will be opened on September 8 and close on the 6^th of October. The company will issue 513.97 million new ordinary shares, of which 195.46 million shares will be accessible to the general public for J$4.40 apiece.
• The company has also set aside 318.52 million shares for current shareholders, staff members, and other strategic partners. Those shares will be made available at $4.05.
• The proceeds of the APO will be used to reduce the Company’s debt by J$1.5 billion to J$2.0 billion; a 36% - 48% reduction.  This reduction in debt is expected to reduce the Company’s interest cost by J$112.5 million to J$160 million and principal payments by J$143 million to J$260 million per annum. This would result in estimated total savings between J$255.5 million to J$420 million which could be annually distributed to shareholders via dividends.

  (Source: JSE)

• The economy of Trinidad and Tobago (T&T) grew by 1.55% in 2022 year-on-year and by 3% in the first quarter of this year, the Central Statistical Office (CSO) said in a statement on Sunday titled Annual and Quarterly Gross Domestic Product.
• The annual growth was mainly in the non-energy sector – followed by some growth in areas of the energy sector – but with contraction in the agriculture and petrochemical sectors.
• The main areas of growth in the non-energy sector were professional, scientific and technical services (47.6%); transport and storage (27.5%); accommodation and food services 19.0%; trade and repairs (6.1%); manufacturing 6.1%, and construction 4.3%. These increases were partially offset by a slowdown in economic activity in agriculture (11.5%), financial and insurance activities (3.1%), and other service activities (1.3%).
• The energy sector was a mixed bag. The energy sector recorded increased activity in asphalt 25.6%; refining (including LNG) (11.6%); petroleum support services (7.5%); natural gas exploration and extraction (5.8%) and petroleum and natural gas distribution (3.1%). However, declines recorded in condensate extraction (16.5%); manufacture of petrochemicals (6.8%), and crude oil exploration and extraction (0.1%) offset the increases recorded in the other energy industries resulting in overall negligible growth in the energy sector.
• Furthermore, the main industries contributing to the 3.0% first quarter growth were mining and quarrying 2.6%; manufacturing 1.6%; trade and repairs 10.9%; transport and storage 16.7%; and accommodation and food services 17.5%.
• That being said, real GDP growth of 2.2% in 2023 is forecasted for T&T, down from 2.7% in 2022. The deceleration will be underpinned by private consumption as the removal of energy subsidies and the rise in global commodity prices at the start of the year erode purchasing power.

(Source: Trinidad & Tobago Newsday)

• After Q223’s real GDP print came in at 3.4% y-o-y (0.9% q-o-q), notably above Fitch Solutions and consensus expectations. Fitch has raised its 2023 growth forecast from 2.3% to 3.0%.
• Notably, this print did mark a deceleration from 4.0% (1.9% q-o-q) in Q123 – following the high figure of 2022 fuelled by a robust harvest at that time. Despite the deceleration, for the first half, the Brazilian economy expanded 3.7%. From a carryover perspective, if Q223’s seasonally adjusted output level is maintained in the remaining two quarters of the year, full-year GDP would grow by 3.1%.
• On a sector level, the agricultural sector contracted by 0.9% q-o-q following the explosive 21.0% growth in Q123, but still increased by 17.0% compared to the prior year. The industrial sector advanced 0.9% q-o-q (boosted by mining), while the services sector added a solid 0.6% (driven particularly by financial services).
• Private consumption, for its part, added 2.0 percentage points (pp) to the 3.4% annual growth rate in the quarter, while net exports added 1.5 pp. Government consumption contributed 0.5 pp, while gross fixed capital formation trimmed 0.5 pp.
• Fitch continues to expect that the Brazilian economy will lose steam in the coming quarters, with growth slowing to 1.4% in 2024, due to the lagged impact of high interest rates and a weaker external backdrop.
• That said, risks to Fitch’s 2023 and 2024 forecasts are to the upside, with some potential for private consumption to continue outperforming Fitch’s expectations. In particular, the Brazilian economy has consistently been surprised by the upside so far this year, with the services sector, in particular, proving to be quite resilient. As a result, there is a risk that even after Fitch’s upward revision the company may still be continuing to underestimate the economy's strength.

 (Source: Fitch Solutions)

• Americans could face a sticker shock with their heating bills this winter, especially if it is a chilly one, due to unusually low U.S. stockpiles of distillate fuels following OPEC+ crude supply cuts and higher demand from Europe, analysts said.
• Distillate inventories, which include diesel and heating oil, were by late August about 15% below the five-year average for this time of year, according to the Energy Information Administration. At below 118 million barrels, stocks represented around 31 days of supply.
• "We are living barrel to barrel and there is just no room for errors in the system," Price Futures Group analyst Phil Flynn said. "If we get a cold winter, there are going to be significant price shocks." Refiners have failed to build sizable stocks ahead of the seasonal surge in demand due to tight supplies of medium and heavy crude oil grades that are distillate-rich.
• Production cuts by the Organization of Petroleum Exporting Countries and its allies, known as OPEC+, have already squeezed the global market for medium sour crude and middle distillates, which will be further tightened by Saudi Arabia's unilateral cuts, said Bjarne Schieldrop, chief commodity analyst at SEB.
• In addition, U.S. exports have helped to deplete stockpiles of the fuel amid strong demand from Europe after Russia's invasion of Ukraine last year led to sanctions on Moscow's energy trade. Inventories have also failed to build despite lackluster U.S. demand in the first half of this year as consumer spending shifted to services over goods.

(Source: Reuters)

• The recent downturn in global property prices is mostly over, with average home prices in major markets now expected to fall less than anticipated at the start of the year and rise into 2024, according to a Reuters poll of property analysts.
• Double-digit price falls that the analysts forecast earlier this year due to rising mortgage rates haven't materialised in full as higher household savings, tight supply, and rising immigration limited declines.
• Many homeowners who locked in cheap mortgages during a long period of near-zero rates, particularly in the United States, have decided to stay put. That has restricted supply and housing market activity.
• But that's more bad news for aspiring first-time homebuyers left on the sidelines for years by tight supply and priced out during the COVID pandemic when existing homeowners outbid them, pushing up house prices at double-digit annual rates.
• Much of the optimism around the unexpected early stabilisation in these markets has stemmed from speculation interest rates have topped out and that as soon as the first half of next year, they'll be coming down again.
• Average U.S. house prices were forecast to stagnate this year and next. In the May and March polls, 2023 values were forecast to fall 2.8% and 4.5%, respectively.
• Affordability is set to remain a problem globally. Overall, a majority of respondents, 55 of 103, who answered a separate question said purchasing affordability for first-time homebuyers would worsen over the coming year. The remaining 48 said improve.

(Source: Reuters)