At today’s auction of Certificate of deposits, Bank of Jamaica received 193 bids amounting to $18.33 billion for $12 billion in 30 days CDs of which 159 bids were successful at an average rate of 6.65 percent, down from 6.75 percent last week and just shy of the Overnight rate of 6.50 percent.
Today’s auction resulted in the total outstanding amount for the 30-day CDs of $131 billion, an increase from last week of $126 billion.
BOJ CD rate drops to 6.65%
October 2, 2024 by
Latest CD rate matches BOJ’s ON rate
September 29, 2024 by
Last week, the Bank of Jamaica received 251 bids amounting to $49.31 billion for an offer of certificate of deposits (CDs) amounting to $45 billion resulting in 220 successful bids.
The auction ended with an average yield of 6.75 percent, down from 6.80 percent at the previous auction held the prior week. The rate last week was similar to the overnight rate and may be an indication that BOJ will cut the overnight rate from 6.75 percent when they meet on Monday.
The total outstanding amount for the 30-day CDs on the settlement date of 27 September 2024, will be J$126 billion up from $122 billion the week before.
Rates on CDs have fallen dramatically from just under 12 percent in March this year as inflation has subsided sharply as well.
Remittance flows to Jamaica falls
September 13, 2024 by
Remittance inflows into Jamaica declined by US$14 million or 4.7 percent to US$289 million in July this year, compared with inflows of $303 million in July last year, representing the fifth monthly fall, for the year to date, data released by the Central Bank of Jamaica shows.
Remittance inflows, currently on track to be the third consecutive year of decline, fell marginally from January to July this year, to US$1.94 million compared with US$1.95 billion for the same period in 2023.
Second monthly decline for Jamaica’s tourism
September 11, 2024 by
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The best short term indicator of the health of Jamaica’s tourism sector can be gleaned from data released by Grupo Aeroportuario del Pacifico, operators of Jamaica’s two major airports showing a 9.4 percent drop to 424,600 passengers coming and going out of the island in August this year, from 468,600 handled in August 2023. The fall in August is far less than the near 14 percent decline in July.
At the same time, Kingston’s Norman Manley Airport, handled 1.8 percent more passengers in August this year, with 199,500 passing through the airport up from 196,100 in August 2023.
For the first eight months of the year, the Montego Bay Airport saw total passenger movements decline 0.8 percent to 3,610,300 in 2024 from 3,639,100 in the first eight months of 2023, while total passenger movements fell by 1.6 percent. Kingston’s Norman Manley International Airport had handled 1,189,300 passengers down from 1,208,100 in the first eight months of 2023.
The decline in arrivals will affect various linkage industries negatively with less business. These include farming, with products such as eggs, pork, chickens, vegetables, fruits, juices and liquor. Also affected are attractions such as Dolphin Cove, Dunns River Falls, ground transportation, water, electricity, workers’ wages and gratuities. This means less money will be spent in the communities impacted by tourism, while Government will collect less taxes from the sector.
More decline for interest rates
September 11, 2024 by
The auction of the latest Certificate of Deposit offering by the country’s central bank, saw 382 bids amounting to $53.35 billion chasing after the $33 billion offered by Bank of Jamaica of which 235 bids succeeded, resulting in an average yield of 6.93 percent, down from 7.03 percent last week.
At the end of the week, the country’s central bank will hold short term CDS of $120 billion, consistent with the holdings in recent weeks.
Murders drop 17% in Jamaica
September 10, 2024 by
The pace at which murders in Jamaica are now being committed is progressing at an accelerated lower rate of 17 percent for the year to date, compared to the similar period in 2023 and a reduction of 16 percent at the end of August and 14.5 percent to July 6, according to data released by the Jamaica Constabulary Force up to the end of the first week of September.
The report shows the period with 163 fewer murders than for the similar period in 2023 when 969 persons lost lives at the hands of criminals, resulting in 806 murders being recorded to date, holding the trend of less than 1,200 for the year.
Drop interest rates and stock market gains
September 4, 2024 by
Many financial market observers had their eyes glued on Bank of Jamaica’s Overnight rate and missed what was happening to interest rates in the Money Market. Interest rates declined from just under 12 percent on 28 day BOJ CDs in March to just 7.03 percent this Wednesday, with the central bank cutting the Over Night rate from 7 percent to 6.75 percent a fall of nearly 3.57 percent but the fall in CD rate was a huge 41 percent.
Rates are heading lower but investors seem to hardly notice the sharp change in market conditions with the cut in CD rates starting in April, at least that is what the performance of the Jamaica Stock Exchange is showing as the market declined in recent weeks, particularly the Junior Market.
What is going on? The argument is that stocks move conversely to interest rate movements. A look back at the 2015 to 2017 period possibly holds the answer. Back then, the Government of Jamaica Treasury bill rates declined by 23.18 percent from May to March 2017 but the All Jamaica Index rose by just 11.58 percent. While Treasury bill rates declined between May and October by 15.12 percent, the market index was going in the opposite direction with a fall in the value of 4.75 percent. The market index moderated in November to just a decline of 1.2 percent following the recovery of losses previously. In December, the market moved positively and carried on that path for several months as interest rates continued to fall. Overall, it took 5 months for the market to hit bottom, before moving higher.
Should CD rates be used as the measure for a decline in rates that will trigger the Stock Market to move higher or Treasury bill rates that have been steadier than CDs around the 8 percent level from 2023?
Stock market moves in opposite direction to interest rates sometimes with a lag.
Why CD rates are more important? While interest rates are important to market developments, the short term CDs are used to pull liquidity from the market, with the amount taken from the market peaking at $160 billion in March and are now at $120 billion. That means more money is in the financial system looking for a home than in the early months of the year. With rates now lower than for some time, investors will be looking for the best place to invest.
Now that inflation is running at an average of 4 percent per annum and economic growth is sputtering, further decline in interest rates can be expected before the end of 2024. Some of these funds will definitely go into stocks. The trend in 2015-2017 is a guide, but not definitive. While interest rates were at recent high levels, several stocks posted solid price gains resulting from rises in profits of these companies. Some of the leading winners with gains for 2024 to the end of August, are Lasco Manufacturing up 62 percent, Caribbean Assurance Brokers 56 percent, Blue Power 49 percent first rock 38 percent, General Accident 32 percent, Everything Fresh, Honey Bun and Wigton 30 percent.
Real estate will also benefit as the cost of borrowing to purchase properties falls in the future. All in all cost of financing will decline as the months roll on.
BOJ CD rates at now at 7%
September 4, 2024 by
Interest rates plunged on the latest Bank of Jamaica Certificate of deposit offer of $7 billion to the public. The auction attracted 295 bids amounting to $32.6 billion but only 39 bids were successful sending the average rate to down to 7.03 percent, just above the Banks’ Overnight rate of 6.75 percent.
The highest successful bid was 7.14 percent. At last week’s auction the average rate clear at 7.61 percent. Rates are down from a peak of nearly 12 percent in march this year.
The central bank continues to hold the stock of short term CDs at $120 billion.
Murders plunged 16% in Jamaica
September 4, 2024 by
Decline in murders is accelerating in Jamaica with the numbers up to the end of August falling by 15.9 percent according to the data released by Jamaica Constabulary Force, this is an improvement over the 14.5 percent fall to July 6.
According to the report, the period saw 147 fewer murders than for the same period in 2023 when 930 persons lost their lives at the hands of criminals. For the year to date, murders were 783 and seemed on track to fall below 1,200 for the year, with the trend suggesting 1,175, with the average murders over three per day, if that were to happen it would represent the third consecutive year of decline. If the trend continues into 2025, murders will fall below 1,000 for the first time since 2003 with 976 murders.
Police divisions with sizeable increases are, St. Andrew Central with 17 more murders up by a whopping 49 percent, St. Andrew North had 10 percent more murders with a rise of 27 percent to 47, but St. Andrew South had 15 percent fewer murders for a total of 67.
Westmoreland experienced declines with a high murder rate of 68, down by 16 percent compared to 2023. Hanover enjoyed a 29 percent cut in murders to 39 while the murder capital of Jamaica, St James enjoyed a sharp 32 percent cut to an extremely high 92, by far the highest of any division. St Ann had a 21 percent reduction to 35 and Clarendon dropped 23 percent to a still-high 52.
More fall in Jamaican interest rates
August 28, 2024 by
Bank of Jamaica offered $31 billion worth of Certificate of deposits to the market today and was snapped up by the public with an oversubscription of $26.5 billion, with 443 bids amounting to $57.5 billion chasing after the amount offered.
The auction resulted in rates dropping again with an average yield of 7.61 percent, down from 7.99 percent last week. CD rates have fallen sharply from just under 12 percent in March as inflation in the country, dropped to an average of 4 percent currently. The average is now just under 100 basis points from the current overnight rate of 6.75 percent.
