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US trade deficit widens in April

Edward Bell - Senior Director, Market Economics
Daniel Richards - MENA Economist
Jeanne Claire Walters - Senior Economist
Published Date: 08 June 2023


The US trade deficit widened in April, to reach a 6-month high of USD74bn, from USD60.6bn in March. The value of exports fell on the month, declining 5.3% m/m, in part driven by petroleum related exports. In contrast the value of imports rose in March, increasing 2.1% m/m, with increases in motor vehicle and cell phone imports. Net trade is now expected to act as a drag on second quarter GDP growth.  

The US Mortgage Bankers Association index of applications for home purchases declined for a fourth consecutive week. The index ended the week of June 2 at a value of 151.7, which amounts to a w/w decline of 1.7%, it’s second-lowest level since 1995. Purchase activity is likely being constrained by not only high lending rates but also a lack of homes for sale. 

German industrial production rose 0.3% m/m in April, below consensus expectations of a 0.6% rise. Despite the March figure being revised to -2.1% m/m from an initial reading of -3.4%, production in the Eurozone’s largest economy remains well below pre-pandemic levels.

Japanese Q1 GDP growth was revised up in the final estimate to 2.7% q/q annualized, from a preliminary reading of 1.6%. The growth was driven by a rebuild in inventories, as well as an improvement in corporate investment, while growth in consumer spending was revised slightly lower.

Results from Tuesday’s election in Kuwait saw opposition lawmakers win a majority in the country’s parliament, gaining 29 out of an available 50 seats. The election was the third in as many years, with the September 2022 election results having been annulled in March this year by the constitutional court. The composition of the new parliament remains similar to the one elected last year, suggesting the political stalemate seen in recent years is likely to continue.

The IMF’s concluding statement from their 2023 Article IV mission to Saudi Arabia highlighted the Kingdom’s robust growth in 2022. With 8.7% y/y growth Saudi Arabia was the fastest growing economy in the G20 in 2022. The IMF expect the momentum seen in non-oil growth to continue into 2023, with estimates in excess of 5% for the first half of the year.  

Today’s Economic Data and Events

  • 13:00 Eurozone final GDP, Q1. Forecast: 0.0% q/q
  • 16:30 US initial jobless claims, w/e Jun3. Forecast: 235K
  • 16:30 US continuing claims. w/e May 2. Forecast 1802K

Fixed Income

  • US Treasury yields spiked overnight as markets responded to the Bank of Canada having to hike rates again and thus adjusting their expectations for what the Federal Reserve will do at upcoming meetings. Yields on the 2yr UST rose by 8bps to 4.5563% while the 10yr jumped 14bps to 3.7952%. Yields were higher across developed markets overnight with 10yr bund yields adding 8bps to 2.45% while gilt yields rose about 5bps to 4.245%.
  • Emerging market Eurobonds generally closed softer overnight. In local currency markets, Turkey 10yr bonds slumped with yields up 61bps to 14.39% while South African bonds managed a modest rally with yields down about 10bps to 11.974%.
  • Commercial Bank of Dubai priced a USD 500m 5yr green bond at +140. Order books were close to USD 1.4bn.


  • Currency markets endured a choppy day but ultimately failed to show much conviction in their moves. EURUSD closed at 1.0699, marginally higher while GBPUSD added 0.1% to 1.2438, both pulling lower with the move upward in UST yields later in the day. USDJPY had a more outsized move, adding 0.4% to 140.13.
  • In commodity currencies, USDCAD was the standout performer as the loonie rallied on the back of the Bank of Canada hiking rates once again. USDCAD dropped 0.3% to 1.337 while AUDUSD fell 0.3% to 0.6652 and NZDUSD sank 0.7% to 0.6037.


  • A surprise hike from the Bank of Canada weighed on some equity markets yesterday. In the US, the especially rate-sensitive NASDAQ dropped 1.3%. The S&P 500 fell by a slighter 0.4%, while the blue chip Dow Jones managed to hang on to gains of 0.3% on the day.
  • Earlier, European indices had also been under pressure with the exception of Italy’s FTSEMIB which closed up 0.1%. The composite STOXX 600 ended the day down 0.2%, with the DAX losing the same amount and the CAC and the FTSE 100 both ending the day down 0.1%.
  • Locally, the ADX gained 0.2% and the DFM 0.3%. The Tadawul gained 0.5% while Egypt’s EGX 30 ended the day 0.8% lower.


  • Oil prices closed higher overnight with Brent futures up 0.9% at USD 76.95/b and WTI adding 1.1% to USD 72.53/b. Data from the EIA showed US oil production up to 12.4m b/d last week, its highest level since April 2020 and moving out of the range near to 12.2m b/d that it had appeared stuck of the last several months. Commercial crude stocks fell by about 450k bbl last week while both gasoline and distillate inventories showed healthy builds.