Issue No.15

For the month ended October 2021, the TT Composite Index returned -0.5%, led downwards by the Cross Listed Index which decreased by -2.40%. The share prices of FirstCaribbean International (FCI) and NCB Financial Group (NCBFG) weighed on the index, falling by -5.54% and -2.30% respectively. The All T&T Index was up slightly during October 2021, as gains in Trinidad and Tobago NGL (NGL) and One Caribbean Media Limited (OCM) were offset by declines in Guardian Holdings Limited (GHL) and Plipdeco (PLD). Trinidad Cement Limited (TCL) released their nine-month results during the month. The company’s EPS improved from 5.4 cents in 2020 to 7.4 cents in 2021. During the month 15 stocks increased, 9 declined and 1 held firm. 

The Government has reopened additional businesses and school children in forms 4-6 are now allowed to attend school regardless of vaccination status. In early November the Prime Minister announced his intention to end the State of Emergency at the end of the month. This move has been welcomed by business owners who have long requested the end of the curfew. To date over 600,000 citizens have 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.

The Fed announced a beginning of its taper process starting at the end of November. According to the statement net asset purchases will reduce at a pace of US$15 billion per month. This is viewed as the first step prior to interest rate hikes. However, it is expected that the Fed will remain in an accommodative policy stance for some time as numerous risks remain. During the month the U.S. economy continued its rebound despite inflation concerns and higher energy costs. Positive sentiment in the market increased after Pfizer Inc. said its Covid-19 pill reduced hospitalizations and deaths in high risk patients by 89%.

The S&P 500 Index reported a positive return of 6.91% in October as stocks benefited from better than expected third quarter earnings.  Nine sectors advanced and two declined. The Energy sector was the top performer climbing by 11.2% over the month as demand increased whilst supply chain and logistical disruptions limited supply.  Communications and Consumer Staples lagged the other sectors declining -1.6% and -0.1% respectively. COVID-19 fears have somewhat subsided with over 58% of the U.S population now fully vaccinated. Details from President Biden’s vaccine mandate states that companies with over 100 employees must guarantee that employees who aren’t vaccinated against COVID-19 produce a negative test at least weekly and wear a mask at the workplace.  We maintain that 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. 

Short term TTD rates declined marginally over the month. The 1-year rate slipped downwards from 0.50% to 0.45%. The rate has a one year low of 0.22% in December 2020 and a high of 2.08% in September 2020. International commodity prices, higher shipping costs, transportation delays and adverse weather conditions all led to a marked increase in food prices locally.

Throughout the first ten months of the year demand for plain vanilla GORTT securities remained strong. The corporate bond market remained relatively dormant with two new issues coming to market in the last month. System liquidity stood at TT$8BN, increasing from TT$6.8BN the previous month. 

US Investment Grade corporate spreads, as measured by the CSI BBB Index, grew by 3.25% over the month of October. The US 10-year Treasury yield increased over the period, from 1.49% on September 30^th to 1.55% on October 31^st. Investors sold U.S. debt expecting that surging energy prices would fuel inflation and increase pressure on the Fed. The Fed continues to reiterate that inflation is transitory however inflation rates are already above 4% and consumers expect inflation to remain at 4% over the next three years.