FED: Gov Bowman: Energy Inflation Shock Temporary, But Wary Of Growing Risks

• The goods-only trade deficit came in at $87.9bn in the advance March release (sa, cons $88.0bn), particularly close to expectations after some large surprises over the past year.
• It left a goods trade deficit at 3.2% GDP on both a three- and twelve-month rolling basis, with the latter at its lowest since the late 1990s.
• This 12-month rolling deficit peaked at 4.6% GDP in Mar 2025 on tariff front-running and compares with 4.0% GDP in 2024 and .3.7% GDP in 2023.
• The March deficit may have been unusually in line but both exports and imports were stronger than expected after a booming February, with exports rising 2.5% M/M (cons -1.6%) after 5.9% and imports 3.3% M/M (cons -1.0%) after 5.1%.
• Details are more limited now that we’re back to the advance releases - government shutdown catch-up saw only the release of the final, detailed reports.
• That said, the largest driver of import strength looks somewhat clearcut, with the broad vehicles category jumping 11.0% M/M to extend a strong bounce from a weak January. The $35.9bn of imports in March was the highest since May 2025 although tariff policies continue to weigh compared to an average $39.5bn in 2024.
• Capital goods imports, the area of greatest growth under the second Trump administration, increased a more modest 1.5% M/M although it follows a huge 35% increase between Sep-Feb. This is comfortably the largest import component at $120.3bn vs total goods $299bn. Of the $34.7bn increase in monthly imports between Dec 2024 and Feb 2026, $23.6bn came from computers and $6bn from computer accessories.  
• Consumer goods imports increased another 4.2% M/M in March but we don’t how much of this came from pharmaceutical products (a key source of volatility in the tariff and weight loss drug era).
• Industrial supplies, which includes petroleum, saw a relatively small increase of 3.2% M/M considering the sharp rise in oil prices, suggesting either volume compression or delay in prices feeding through to contracts.  
• Highlighting the range of trends within the data, overall imports were -13% Y/Y lower in March, with consumer goods -44% Y/Y (peak negative base effect from Mar 2025 tariff front-running) and industrial supplies -27% Y/Y, but capital goods rising 28% Y/Y.  

A week intended to kickstart the GOP’s legislative sprint ahead of the midterms is off to an inauspicious start, with Republican hardliners threatening to tank four major pieces of legislation. Punchbowl News reports, “After a Rules Committee hearing that stretched from Monday to Tuesday, House GOP leadership plans to go to the floor today with a blueprint for debating several key bills. These include a FISA Section 702 renewal; a farm bill; legislation allowing the year-round sale of E15 ethanol fuel; and a budget resolution to fund ICE and Border Patrol. But that GOP-drafted rule looks destined to fail, another potentially devastating misstep for Johnson and his top lieutenants.”

• But conservative opposition appears dug in. Rep. Lauren Boebert (R-CO) wrote on social media that she is “a NO on the Rule,” while Rep. Nancy Mace (R-SC) also signaled opposition. "There’s also lingering skepticism among House conservatives over the scope of the budget blueprint approved by the Senate that could imperil its chances on the House floor. The surveillance authority expires tomorrow, and the Trump administration has warned it can’t pay DHS workers under executive order past this week," per Semafor.
• The White House is losing patience with the gridlock in the House, issuing a memo urging the lower chamber to sync up with a DHS funding bill passed by the Senate weeks ago: “DHS will soon run out of critical operating funds... Accordingly, the House should promptly pass S. Con. Res. 33, as passed by the Senate, to enable swift advancement of a reconciliation bill that would fully fund Immigration and Customs Enforcement (ICE) and Border Patrol for the remainder of President Trump’s term.”

A White House official tells Reuters that “Trump and oil companies discussed steps to continue Iran blockade for months if needed”.

• This is in line with prior reporting re: Trump telling aides to prepare for an elongated blockade of the Strait of Hormuz, but enough to support crude, with Brent trading to fresh highs, supporting the USD and weighing on equities and bonds.