US: Trade deficit data in focus today – BMO CM

Sal Guatieri, Research Analyst at BMO Capital Markets, notes that the US goods trade deficit widened almost $6 billion in October amid a hefty drop in merchandise exports (albeit after an impressive four-month upswing led by soybeans) and a jump in imports.

Key Quotes

“For Q4 GDP, this should mark the start of a major retracement of the 0.9-ppts contribution from trade in Q3. In fact, the 10% (annualized) leap in Q3 exports stemmed from one category (food, feeds and beverages), which largely reflected soybean shipments, as American producers stepped in to fill the gap left by poor harvests in Brazil and Argentina. Together with the stronger greenback, the trade headwinds will begin to swirl after a brief respite. This could fan protectionist rhetoric from the incoming Administration.”