Trade deficit continues to support bonds

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According to the Bureau of Economic Analysis,

More imports than exports creates a trade deficit

“Total January exports of $114.4 billion and imports of $182.9 billion resulted in a goods and services deficit of $68.5 billion.”

“Total 2005 exports of $1,272.2 billion and imports of $1,995.8 billion resulted in a goods and services deficit of $723.6 billion.”

Slower growth in trade deficit

The January trade deficit, annualized, represents a 13% increase over the trade deficit of 2005.

Since the trade deficit increased 18.3% in 2004 and 15.1% in 2005, the current rate of increase seems to indicate slower growth in the trade imbalance.

Nevertheless, the excess of imports over exports means that cash is flowing into the US capital market from abroad, which should continue to prop up long bond prices.