Since energy prices have soared in March, the U.S. trade deficit may have shrunk dramatically due to booming exports. The Commerce Department reported on Thursday that the U.S. trade deficit rose 4.9% in February to $57.4 billion, which was less than economists’ consensus estimate of $62 billion. Specifically, exports rose by 4.2% to $314.8 billion, while imports rose by 4.3% to $372.1 billion. During his national address on Wednesday, President Trump reminded the world that they could buy crude oil, LNG, and refined products from the U.S., since we have a large production surplus.
The other good news is that the Conference Board announced on Tuesday that its rose to 91.8 in March, up from 91 in February. The present situation component surged to 123.3 in March, up from 118.7 in February. The expectations component declined to 70.9 in March, down from 72.6 in February. I suspect that the fact that the weather significantly improved in March also helped to lift consumer sentiment. Currently, the Atlanta Fed is estimating first-quarter growth at a 1.9% annual pace, but that may be revised higher in the wake of stronger-than-expected retail sales, a smaller-than-expected trade deficit, plus other positive economic news.
As an example of positive economic news, the Institute of Supply Management ( ) announced on Wednesday that its manufacturing index rose to 52.7 in March, up from 52.4 in February. This is the third straight monthly increase in the ISM manufacturing index, since any reading above 50 signals an expansion. Especially encouraging is that the production component rose to 55.1 in March, up from 53.5 in February.
The prices component surged to 78.3 in March, up from 70.5 in February, which signals that there is raw material inflation that may show up in finished goods prices. In fact, in the past two months, the prices component has risen 19.3 points to its highest level since June 2022. Fully 13 of the 16 industries that ISM surveyed reported an expansion in March, so the manufacturing sector has firmed up and will likely cause many economists to revise their GDP estimates higher.
The anxiety regarding private credit will persist, but at this time, it appears that the industry will continue to avoid borrower defaults, since that would be catastrophic to the entire $3 trillion private credit industry. According to the Financial Times, private credit firm has been hit with a 40.7% in redemption requests from its Blue Owl Technology Income Corp fund. Another Blue Owl fund, the Blue Owl Credit Income Corp, has been hit with 21.9% in redemption requests. For now, Blue Owl is sticking to its 5% redemption limit. , , and are also imposing redemption limits. In the event of a private credit default, the Fed may have to step in and slash key interest rates, since banks are big private credit investors.
Avoiding Defaults as Private Credit Faces Rising Redemption Requests
