• Fitch Solutions expects that Banco de México (Banxico) will hold its benchmark interest rate at 4.25% through end-2021, after cutting the rate at its most recent policy meeting.
• The agency expects inflation will hover near the upper end of Banxico’s 2.0-4.0% y-o-y tolerance band. This will discourage the bank from cutting further, despite the country’s deep contraction.
• While the agency sees a plausible scenario in which the bank cuts to 4.00% in the near term, over the longer term, risks from financial markets and public finances could lead the bank to hike rates before expected.

(Source: Fitch Solutions

• Guyana’s current account deficit will sharply narrow in the coming years, turning to a surplus by 2023, largely because of surging crude oil exports.
• The country’s oil boom will support robust real GDP and import growth, in contrast with many markets in the Americas where imports have fallen in 2020 amid deep economic contractions.
• Fitch Solutions forecasts Guyana’s current account deficit will be 38.9% of GDP in 2020 and 25.1% in 2021, from an estimated 51.1% deficit in 2019.

(Source: Fitch Solutions)

• U.K government borrowing soared to 173.7Bn pounds ($222Bn) in the first five months of the fiscal year as the costs of the coronavirus pandemic continued to mount.
• The budget deficit in August alone was 35.9Bn pounds, the Office for National Statistics said Friday. Britain now has borrowed more since a national lockdown was imposed in March than during the whole of the year following the 2008-09 financial crisis.
• The pandemic has wrought havoc with the public finances. Debt is now above 2Tn pounds and the deficit –- the amount the government needs to borrow to fund its spending -– is set to be approaching 400Bn pounds in the current fiscal year.
• At almost a fifth of gross domestic product, it would represent the largest gap in British peacetime. In 2009-10, the deficit hit 157.7Bn pounds or 10.1% of the economy.

(Source: Bloomberg)

• The number of first-time filers for unemployment benefits was slightly higher than expected last week as the labor market continues its sluggish recovery from the coronavirus pandemic.
• The Labour Department reported Thursday that initial jobless claims for the week ending Sept. 19 came in at 870,000, adjusted for seasonal fluctuations. Economists polled by Dow Jones expected first-time claims at 850,000, down slightly from the previous week’s 860,000.
• Without the adjustment, about 825,000 people filed last week, up from the previous week’s 796,000. More than 6 million people a week filed during the peak of the layoffs in the spring, when Congress approved $600 a week in supplemental benefits. The supplemental benefits expired this summer.

(Source: CNBC)

• CAC 2000 LTD reported a net profit of $7.24Mn (EPS: $0.06) for the nine months ended July 31, 2020, compared to a net loss of $39.47Mn (EPS: -$0.31) made in the corresponding period in 2019.
• The improvement in the bottom-line was supported by an 8% (or $190.54Mn)  increase in revenue, coupled with a 3.6% (or $11.18Mn) reduction in administration and other expenses.
• However, this outturn was tempered by the 22.2% (or $110.76Mn) increase in direct costs and a 95.0% (or $44.84Mn) fall in other income.
• Management noted that the company is managing and even pivoting to build on new growth opportunities despite the COVID-19 pandemic. This was evident in the realization of the highest quarterly revenues for this financial year, the reduction in operational expenses, and efforts to drive down inventories.
• The company’s stock price has declined by 20.7% since the start of the year, closing Wednesday’s trading session at $11.90. At this price, the stock currently trades at a P/B of 4.1x, which is above the Junior Market Distribution Sector Average of 2.9x.

(Source: CAC Financials)

• Brazil's fiscal deficit is expected to widen to a historic 18.2% of GDP in 2020 and narrow gradually over the coming years, to 10.0% in 2021.
• Fitch Solutions has revised down its forecasts, from 14.9% in 2020 and 9.1% in 2021 previously, as the Bolsonaro administration has embraced a more open-ended commitment to maintaining elevated social spending in order to maintain his popular approval.
• The government's weakening commitment to fiscal reforms is likely to undermine market confidence in its long-term fiscal sustainability, raising its borrowing costs and potentially creating pressure for consolidation in the medium term.

(Source: Fitch Solutions)

• Fitch Solutions expects Peruvian President Martín Vizcarra to survive the ongoing impeachment effort launched by members of Congress on September 11 and remain in office.
• That said, congressional tensions with Vizcarra and his cabinet members will significantly limit policy formation through the end of the government’s term in July 2021. Fitch Solutions adjusted Peru’s score in its Short-Term Political Risk Index to 58.3 out of 100, from 59.4 previously, to reflect higher risks.
• Though it is not the core view, if Congress does remove Vizcarra from office, it would likely fuel public unrest and threaten longer-term policy continuity, weakening the country’s political institutions that have withstood a series of crises over the last four years.

(Source: Fitch Solutions)

• The Bank of England gave the clearest signal yet that it may consider cutting interest rates below zero for the first time in its history as the economy gears up for a period of unusual uncertainty. The pound fell.
• With multiple threats to the outlook looming, the BOE will begin “structured engagement” with U.K. bank regulators on how it might implement negative rates. While officials had previously said they were reviewing the case for such a move, and Governor Andrew Bailey has not ruled it out, the preparation goes beyond anything is seen before.
• The comments in the minutes of Thursday’s policy decision prompted investors to bet that the next 10 basis points of easing will come in May, with another cut of the same magnitude to follow in November 2021. The pound weakened and was trading down 0.5% at $1.2905 at 12:34 p.m. in London.

(Source: Bloomberg)

• The way Federal Reserve Chair Jerome Powell sees it, the U.S. labor market has a long way to go to meet the central bank’s maximum employment goal and a lot of boxes to tick along the way.
• In his most extensive effort to explain how the Fed will measure progress toward a goal prioritized last month under the Fed’s new framework, Powell was clear on Wednesday that he and other policymakers were not focused on any single number, such as the unemployment rate.
• “Maximum employment is not something that can be reduced to a number the way inflation can,” Powell told a news conference after the Fed announced its commitment to keep interest rates low until they are convinced of the job market’s strength and that inflation is on track to run above the Fed’s 2% goal for some time.

(Source: Reuters)

• Limners and Bards Limited reported a 54.4% (or $38.00Mn) increase in net profit to $107.81Mn (EPS: $0.11), for the nine months ended July 31, 2020, relative to the corresponding 2019 period.
• The improvement in the bottom-line was supported by a 41.1% (or $199.87Mn) increase in revenues primarily driven by growth in media placement (up 60.5% or $136.30Mn), advertising agency (up 72.7% or $58.10Mn), and production (up 3.0% or $5.30Mn) year over year.
• Further, the company saw benefits from its 2019 listing on the Junior Market as it started to reap the benefits of the tax exemptions, incurring no tax expenses for this period relative to $18.82Mn reported last year.
• Management has expressed that it will focus on product and service innovation as they actively work on improving efficiencies as they head into the 4th quarter.
• The company’s stock price has declined by 4.0% since the start of the year, closing Tuesday’s trading session at $2.89. At this price, the stock currently trades at a P/E of 20.6x earnings, which is below the Junior Market Others Average of 57.8x.

(Source: LAB Financials)