According to a US Bureau of Economic Analysis release of July 12, 2006, the US trade deficit leveled off during 2006, with a difference between imports and exports of goods and services of $63.8 billion in May 2006.

Since the trade deficit is a major source of funds for the US bond market, a slowing of the rate of growth of the deficit will effect interest rates.

The above graph shows how the increase in the US trade was halted in 2006.

Although the rate of growth of the trade deficit has slowed, the absolute size of the deficit has continued to expand, continuing to feed foreign demand for US bonds.

This entry was posted on Sunday, July 30th, 2006 at 6:50 am and is filed under Treasuries, Open Market, Municipals, Corporate Bonds, Foreign Investors. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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