US first quarter GDP likely to be negative after jump in trade deficit

Tracking estimates lowered after trade deficit hits 6-year high.

The ISM surveys paint a better picture of the second quarter but it's likely that the economy contracted in Q1. The initial estimate on GDP was just +0.2% in Q1 but that may be revised a half-point lower after the trade data.

Credit Suisse says its "Q1 GDP tracking estimate currently runs at -0.3% annualized from the initially reported +0.2%. BNP Paribas cuts its estimate to -0.4% from +0.2%. TD said the deficit will shave 0.2-0.3 pp from GDP.

At this point the market is more focused on Q2 but the downward momentum in the US dollar continues to accelerate despite the ISM data. I believe the bond market is in charge here and that rising yields are prompting a squeeze on long-dollar positions.