In Brief
- US Political Shift & Energy Impact: Democrats won control of both the US House and Senate, driven partly by voter concern over the Iran war and high petrol prices. Reports of US-Iran talks pushed Brent crude below US$100, reducing Trinidad and Tobago’s energy revenue windfall.
- Global Tech Rout: Global equities suffered steep losses led by an unwinding of AI trades. The Nasdaq fell into correction territory, while Japan’s Nikkei 225 plunged 11.17% into a technical bear market.
- T&T Resilience & Liquidity Surge: Local equities and USD sovereign bonds held up well despite global turmoil, while excess liquidity in T&T’s commercial banking system surged by TT$1.81 billion to reach TT$5.50 billion.
Democrats won control of both the House and the Senate in Tuesday’s midterm elections. CBS News projects that the party will hold at least 54 Senate seats, after flipping seven states. Analysts linked the swing partly to voter concern over the war with Iran and higher petrol prices. President Trump reportedly said he would accept the results.
For Trinidad and Tobago, the main channel is energy. A Democratic Congress is likely to press for closer oversight of the Iran war and of US military operations in the Caribbean, and reports this week that Washington and Tehran are moving towards a deal pushed Brent below US$100. Lower oil prices reduce the energy windfall that has supported T&T’s revenues and foreign exchange inflows this year. Sanctions licences for cross-border gas fields such as Dragon remain with the US Treasury, so the executive branch keeps control, but Venezuela policy will face more congressional scrutiny.
US equities had their roughest week in months. Over five trading days, the S&P 500 fell 2.67%, the Nasdaq Composite 3.37% and the Dow Jones 0.94%. Thursday’s selling was the heaviest since April 2025: the Nasdaq tumbled 5.5% into correction territory—more than 10% below its recent high—while the S&P 500 lost 4.4% and all 11 sectors closed lower. Companies tied to the AI build-out led the decline, and JPMorgan said selling by systematic funds amplified the move. Micron fell 22.01% on the week, Broadcom 9.52%, Nvidia 8.80% and Tesla 10.40%. Treasury yields drifted lower, with the 10-year at about 4.87% and the 30-year at 5.28%.
In the United Kingdom, the FTSE 100 slipped 0.52% as falling oil prices hit its large energy weighting, with BP down 11.63% and Shell 7.78%. The FTSE 250 gained 0.21%. Continental Europe proved more resilient: the STOXX Europe 600 rose 0.24%, France’s CAC 40 gained 2.13% and Italy’s FTSE MIB 1.12%, while Germany’s DAX was flat. Banco Santander rebounded 5.71%, but TotalEnergies fell 6.67% and Siemens Energy 6.95%.
Japan’s Nikkei 225 plunged 11.17% for the week, including a 6% drop on Friday that left it 20% below its June peak and in a technical bear market as investors unwound AI trades. Hong Kong’s Hang Seng rallied 5.10%, China’s Shanghai Composite rose 1.39% and Australia’s ASX 200 gained 1.27%. India’s Reliance Industries jumped 13.31%, while PetroChina fell 8.24% with oil.
Trinidad and Tobago equities were mixed but held up far better than global markets. The Composite Index slipped 0.28% to 996.38 (+5.27% year to date), the All T&T Index eased 0.06% and the Cross Listed Index fell 0.87%, while the SME Index gained 1.37%. Decliners outnumbered advancers 10 to 7. Massy led trading with 42.89% of shares traded, followed by National Flour Mills and NEL.
Liquidity in the domestic banking system rose sharply this week. Commercial banks closed the week with excess reserves of TT$5.50 billion, up from TT$3.69 billion a week earlier—an increase of about TT$1.81 billion. That reverses the previous week’s decline of about TT$452 million and takes excess liquidity well above the TT$3.7 billion to TT$4.8 billion range seen since early October. High excess reserves leave banks with more cash to put to work, which supports demand for government securities and helps keep short-term TT dollar interest rates low.
In the regional bond market, Trinidad and Tobago’s USD bonds were essentially unchanged despite the turmoil in equities and the fall in oil. The 2038 bond was offered at 94.40 (6.90% yield), against 94.50 a week earlier, and the 2036 held at 98.30 (6.75%). The short 2027 was offered at 100.70, yielding 4.50%. Two forces offset each other: lower US Treasury yields supported prices, while weaker oil prices weighed on T&T’s credit outlook.
TSTT 2036 Notes were offered at 102.00 this week, up from 100.50 last week, a gain of about 1.5 points that cut the offer yield from 9.66% to 9.41%. The spread over the T&T 2036 sovereign narrowed from about 290 to roughly 265 basis points.
Market Outlook
Markets now face a new political landscape in Washington alongside a sharp reversal in the AI trade. Divided government is likely to limit major tax or spending changes, which may help keep Treasury yields contained, but it also means more contested budget negotiations and oversight of foreign policy. The key questions for the coming weeks are whether the tech sell-off and the unwinding of crowded hedge fund trades run further, and whether US-Iran talks produce a lasting agreement.
For Trinidad and Tobago, Brent below US$100 reduces the energy windfall that has supported revenues this year, raising the importance of new gas supply from projects such as Manatee and Dragon. Strong local liquidity, firm demand for long GORTT paper and the successful TSTT refinancing suggest that domestic and regional investors remain willing to fund T&T issuers, though at yields that reflect the country’s credit risks.
About the author: Dave Dookie is the CEO of Waterloo Capital Advisors Limited, a Trinidad and Tobago based financial advisory firm specializing in investment management, capital markets and structured finance. He has advised governments, financial institutions, and energy companies on debt issuance, project financing, and strategic capital raising across the Caribbean. He holds degrees and advanced qualifications from the London School of Economics and Political Science (LSE) and the University of London and has completed advanced training in data science through the MIT Applied Data Science Programm
