Issue No.14

For the month ended September 2021, the TT Composite Index returned -0.08%, led downwards by the All T&T Index which decreased by 0.11%. The share prices of National Enterprises Limited (NEL) and Trinidad and Tobago NGL Limited (NGL) weighed on the index, falling by 9.72% and 4.57% respectively. Investors were notably pessimistic towards the Energy industry, despite a steep rise in energy prices and forecasts for increasing domestic production. The Cross Listed Index was flat during September 2021, as gains in JMMB Group Limited (JMMBGL) and NCB Financial Group Limited (NCBFG) were offset by a decline in FirstCaribbean International (FCI). During the month 13 stocks increased, 9 declined and 3 held firm.

The Government has continued it program of a staggered reopening of the economy. Businesses have been allowed to reopen under strict guidelines which many believe will negatively impact their overall performance. To date, approximately 35% of the population has been fully vaccinated with a choice of vaccines still accessible to all citizens over 12 years old. We continue to encourage persons to vaccinate as further advances in this area should bode positively for increased economic activity.

In September growing fears of the Delta variant, inflation, Chinese real estate debt defaults, the U.S. debt ceiling and higher energy costs all contributed to an uncertain outlook and high market volatility. Despite these fears the U.S. Economy has been rebounding at a fast pace with a successful vaccine campaign having brought millions of jobs back online and fiscal stimulus supporting above average consumer spending. In terms of monetary policy, a taper of asset purchases is expected to be the first step in the Fed’s removal of accommodative policies. Analysts however believe that even after tapering, the Fed will remain in an accommodative policy stance for some time. 

The S&P 500 Index reported a negative return of -4.76% during the month. The energy sector was the only sector to post a positive return in September, climbing 11% over the one-month period. Energy prices soared as demand increased whilst supply chain and logistical disruptions limited supply. Ten sectors declined with the bottom performers being Materials (-6.2%) and Utilities (-6.3%). Moving forward, growth is likely to slow from its average in the first half of the year as the delta variant persists, supply shortages remain, and pandemic stimulus tapers off. Analysts have revised GDP growth estimates for 2021 from 6.1% to 5.9%, which still represents the strongest annual pace of gains since 1984.

Short term TTD rates declined marginally over the month. The 1-year rate slipped downwards from 0.52% to 0.50%. The rate has ranged from 0.22%-0.54% since dropping from 2.08% in September 2020 when the Central Bank cut both reserve requirements and its repo rate to spur increased liquidity to combat the impact of COVID closures. Food inflation has risen by more than 50% when compared to the same period last year to 4.9% due to global supply shortages and logistics disruptions stemming from the pandemic.

Throughout the first eight months of the year demand for plain vanilla GORTT securities remained strong. The corporate bond market remains dormant with few new issues having come to market despite the low rate environment. System liquidity currently stood at TT$7.7BN, increasing from TT$6.88BN the previous month. 

US Investment Grade corporate spreads, as measured by the CSI BBB Index, shrank by 2.47% over the month of September. The US 10-year Treasury yield increased sharply over the period, from 1.31% on August 31^st to 1.49% on September 30^th. A more hawkish’ tone in updates from the Central Bank sparked a rise in yields across the curve with the Fed indicating in its official release that it may soon begin reducing or ‘tapering’ its asset purchases program, and over half of the Fed officials now seeing at least one rate hike likely in 2022.