Marketbites: Record High U.S. Trade Deficit
Portfolio Manager Commentary:
Markets rose Tuesday following Fed Chair Jerome Powell’s comments indicating inflation has started easing. The major indexes jumped up during and shortly after his remarks in a midday conversation at The Economic Club of Washington, D.C. Powell said later in the discussion that the Fed could be forced to hike more aggressively. Thus, the indexes turned briefly negative after the initial pop before settling back up in the green to close.
“The market’s doing the best that it can to try to discount two very different scenarios, both of which are really driven by what the Fed is going to do,” said Dave Grecsek, managing director of investment strategy and research at Aspiriant. “The scenario is we get a recession or do we not, and it’s highly dependent, in the market’s eyes, on how quickly the Fed nears the end of its rate hike campaign.”
Chart of the Day:
The U.S. posted its largest trade deficit on record last year, as global demand weakened amid high inflation, climbing interest rates, disruptions due to the Ukraine war as well as the pandemic’s continued effects. America’s imports exceeded its exports by $948.1 billion in 2022, up 12.2% from 2021, the Commerce Department said Tuesday. For the month of December, decreasing exports and increasing imports raised the U.S. trade deficit to $67.4 billion.