Trade Deficit Widens, US Exports Hit Another Record High, Initial Jobless Claims Plunge

- The Trade Deficit for February widened to -$62.3 billion versus estimates of -$57.5 billion and -$59.0 billion in January.

- Initial Jobless Claims for this week fell to 357K versus estimates of 383K and 410K the prior week.

- Continuing Claims came in at 2940K versus estimates of 2935K and 2937K prior.

BOTTOM LINE: The US trade deficit unexpectedly widened in February, reflecting a jump in purchases of imported automobiles and industrial machinery, Bloomberg reported. The 3.1% gain in imports was the largest in almost a year. The petroleum deficit fell for the first time in 8 months as a decline in demand more than offset record prices. The trade gap with China shrank to the lowest level since March 2007 as imports from the nation shrank 7.8%. American exports rose 2% to another new record of $151.4 billion. I expect the trade deficit to shrink in March.

The number of Americans filing first-time claims for unemployment insurance last week fell the most since September 2005, Bloomberg reported. The four-week moving average rose to 378,250. The unemployment rate among those eligible for benefits, which tracks the US unemployment rate, held steady at a historically low 2.2%. Last week's jump in claims was mostly related to the Good Friday holiday. Initial jobless claims remain at levels not normally indicative of economic contraction and should begin trending lower later this quarter. The US Dollar Index is rising .14% and the 10-year yield is rising 4 basis points on today’s reports. Fed fund futures now imply a 56.0% chance for a 25 basis point cut at the upcoming April 30^th meeting and a 44.0% chance for a 50 basis point cut. I still believe a 50 basis point cut is very unlikely at this point.