US DATA: Another Huge Trade Deficit, ‘Tentative’ Signs Of More Gold Disruption

The goods trade deficit was again notably larger than expected in February, at $148bn (cons $139bn) in the advance release after what was a huge overshoot of $156bn back in January. Regular GDP tracking could be marked even more negative after this release but next week's final release is needed to know the extent of the latest gold disruption here. 

• Demonstrating the particular uncertainty at the moment, the 35 analyst estimates had ranged from a deficit of $120bn to $162bn for February.
• On a three-month rolling basis, this put a goods deficit at circa 5.7% GDP for its largest since late 2008 although there is a significant monetary gold angle at play.
• Imports saw barely any pullback after jumping in January (-0.2% M/M after an almost unprecedented 12.5% M/M in Jan). Exports meanwhile drove the sequential improvement (4.1% M/M after 1.6% M/M), driven by auto exports rising 12.7% M/M after two monthly declines but it’s a noisy series.
• Most focus will be on the import ledger, and here there was only limited pullback in “industrial supplies”, with -5% after +34% in Jan and 19% in Dec. To put this in perspective, whilst the actual value dipped from $90.5bn to $86.0bn in February, it’s still significantly above the ~$55bn averaged each month through most of 2024.
• Recall that a large part of the January ramp higher appeared to be from monetary gold back in January, with these non-productive assets captured in import data but not in GDP data.
• We suspect this gold angle was again a significant driver in February (judging by a further increase in Comex gold inventories throughout the month) but we won’t have a better idea until the full February release on Apr 4. Gold bars are hidden in “finished metal shapes”, which in turn is a sub-component of the aforementioned “industrial supplies” (the most level of detail we get in today’s release).
• In the interim, the Atlanta Fed’s GDPNow will be updated tomorrow. It has recently started to publish “gold-adjusted” estimates, and yesterday’s update saw its usual tracker at -1.8% vs +0.2% gold-adjusted.
• Today’s trade data alone could well drive the regular tracker even more negative although we don’t know how they’ll be able to update the gold factor before next week’s full release.
• Other imports showed signs of a cooling in tariff front-running: consumer goods (2.8% after 8.3%) capital goods (1.0% M/M after 5.5%) and autos (1.2% after 2.3%).