Danske Research Team points out that the US goods trade deficit shrank in January as exports recovered, but it remains above last autumn’s lows. The bank expects the deficit to widen later this year as import volumes recover, while upcoming PCE and sentiment data will help gauge inflation perceptions amid elevated fuel prices and geopolitical tensions.

Deficit improvement viewed as temporary

"In yesterday's release, the US goods trade deficit narrowed from USD 99.2bn to USD 81.8bn in January primarily as exports recovered."

"That said, the deficit remains above last fall's lows, and we expect it to continue widening later in the year as import volumes are likely to recover."

"Looking to today, the University of Michigan's flash March survey will provide the Fed with the first (partial) sense of how consumers' inflation perceptions have evolved during the war."

"The Fed's preferred measure of inflation, the PCE, will be released for January today. The January JOLTs report is also due for release today after a delay caused by the government shutdown."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)