Tuesday opens with the release of the U.S. Trade Balance at 8:30 am EST. Following a deficit of $26 billion for February, the deficit is expected to widen slightly to $27.5 billion in March. The deficit has been shrinking dramatically in recent months, which is usually considered good news, but the recent decrease has been a result of falling exports and collapsing oil prices, rather than fewer imports, so the numbers are up for interpretation.
Michael Gregory from BMO Capital Markets noted the February deficit was the smallest trade balance in more than nine years. The trend won’t hold, he said, as exports probably fell in April, while oil prices surged 22%.
Later in the day at 2 pm, the Treasury will release its Monthly Budget Statement for April, which is expected to show a deficit of $28 billion, a stark contrast to the April 2008 surplus of $159 billion. The annual deficit is already twice as big as it was this time last year, and looking ahead, the 2009 fiscal statement is shaping up for a $1.8 trillion deficit.
Tuesday will also see comments from two regional Federal Reserve presidents. At 8:20 am, FOMC voting member Dennis Lockhart gives an opening speech at the Atlanta Fed’s Financial Markets Conference. At 8:30 am, Boston Fed President Eric Rosengren participates on a panel assessing financial risks.
The two speakers follow Chairman Ben Bernanke’s speech from Monday night, wherein he commented that undercapitalized banks’ efforts to raise fresh funds has been “encouraging.” He warned against viewing the Stress Tests as a final barometer, and told banks to continue monitoring liquidity risks in the months ahead.
“Ideally, the stress tests used in the assessment program should be part of a broader palette of internal stress tests conducted by firms,” Bernanke said. “Indeed, we do not intend that the capital assessments should be taken as all that those firms need to do.”
In lighter data, Tuesday also sees two weekly retail sales reports. the ICSC report, just posted at 7:45 am, said retail sales advanced by 0.7% compared to one year ago. At 8:55 am, investors will hope to see similar results in the Johnson Redbook report.
Once markets close, ABC News will publish its Consumer Comfort report. Sentiment remains deeply pessimistic overall, but on last Tuesday the weekly report showed improvement to a score of -43, the best reading since September.