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11th Feburary 2010
FirstCaribbean Daily Markets Report
Tuesday, February 09th, 2010

Global Markets
• Nobel laureate Joseph E. Stiglitz said the prospect of a default by the U.S. or the U.K. is an ``absurd’’ notion constructed in financial markets. Both nations ``deserve to keep the Aaa rating’’ and ``the likelihood of a default is so small, particularly in the U.S. because all we do is print money to pay it back,’’ he said.
• UBS AG, the European bank with the biggest losses from the credit crisis, said withdrawals by wealthy clients accelerated in the fourth quarter even as the company reported its first profit in more than a year. Net redemptions at its wealth management units increased to 45.2 billion francs ($42.3 billion) from 26.6 billion francs in the previous three months.
• The European Central Bank may be forced to delay the withdrawal of emergency lending measures because it could inflame financial-market concerns about Greece, Spain and Portugal, economists said. Investors are already dumping those countries’ assets as their governments struggle to rein in budget deficits.
• The cost of protecting Australian government bonds from default jumped to close to a nine-month high as growing concerns about sovereign credit risk in Europe hurt other debt around the world.
• Corporate bond spreads have widened for three weeks, the longest stretch for about a year, while spreads for U.S. high yield, high risk companies expanded by the most since August last week. Optimism for the corporate bond market is fading as Greece, Spain and Portugal deteriorate, Japan struggles to emerge from recession and concerns grow that emerging market valuations are too high.
• Copper, crude oil and sugar are the top picks among commodities, with the three set to gain on supply constraints according to Morgan Stanley.

Figure 1: U.S. Daily Economic Indicators


 
 
Caribbean Markets
Barbados
• Official figures for calendar year 2009 confirm that the tourism sector declined by a significant 8.6%.
• Barbados Tourism Authority (BTA) preliminary figures show a 5.3% increase in arrivals as at January 29 over the previous period in 2010.

Bahamas
• The Central Bank of the Bahamas is mulling over implementing legislation that would give it more control over liquidity, a senior officer at the bank has revealed, with the move seen as one to encourage greater inter-bank cooperation.
• According to the Central Bank solve a lot of liquidity issues among banks.

Dominica
• The International Monetary Fund (IMF) is predicting that the Dominican economy will grow by nearly 2% in 2010.

Jamaica
• Freezing public sector wages is only a short-term measure to tame macro expenditure, and public sector reform must be implemented to ensure long-term fiscal contraction. That’s the view of International Monetary Fund (IMF) mission chief for Jamaica, Trevor Alleyne.
• Effective today the rate payable on 30-day instruments offered by the Bank of Jamaica will be reduced by 50 basis points from 10.50% to 10%.
• The adjustment to the 30-day rate reflects the added boost to confidence that the IMF Board endorsement brings, with half of the financial support approved by the Fund received by the Bank of Jamaica on Monday. In that context, the gross international reserves are now approximately US$2.2 billion, representing some 16.9 weeks coverage of imports of goods and services. Additional foreign exchange inflows from other multilaterals are expected later in February.
• The receipt of these financial inflows may support stability in the foreign exchange market and assists the Bank of Jamaica’s expectation of reduced inflation in 2010.

Trinidad
• Trinidadians and Tobagonians are buying fewer cars, building fewer homes and spending more on their credit cards.
• These and other economic indicators from the Central Bank suggest that the local and regional economy will continue to see tight times through 2010.


Figure 2: Tracking key Caribbean financial indicators

DISCLAIMER- This document is for informational purposes only. This information is based on the close of the previous business day activity. The information presented is from usually reliable sources. FirstCaribbean has not independently verified the facts, assumptions, and estimates contained in this report. No representation or warranty, express or implied, is made as to, and no reliance should be placed on the fairness, accuracy, or completeness of the information and opinions contained in this report. FirstCaribbean International Bank accepts no liability for any loss occasioned by reliance on any information contained herein which may prove to be incorrect. For current market bids and offers, please contact: David Whitcroft, Treasury Sales & Trading, FirstCaribbean International Bank, Phone 246-367-2272 (Barbados), and Fax: 246-421-9207 (Barbados); david.whitcroft@FirstCaribbeanBank.com

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