US: Treasury Sec Bessent On A Strong Dollar, Tariffs, Issuance Outlook

RRP usage continues to recede, $208.296B this afternoon from $231.926 Monday. Compares to $98.356B on Friday, December 20 - the lowest level since mid-April 2021. The number of counterparties slips to 56 from 57.

• Building on what our policy team wrote on the Canadian trade data earlier today, the merchandise trade deficit was smaller than expected in November at C$0.3bn (cons C$0.9bn) after a downward revised C$0.5bn (initially C$0.9bn).
• It left a three-month annualized deficit of circa 0.3% GDP after the 0.5% previously.
• The services balance meanwhile keeps to a much healthier position than previously seen after recent revisions, worth a deficit of just 0.1% GDP when averaged over the past three months.
• Combined, the goods & services deficit was circa 0.4% GDP annualized in the three months to November. From a trend perspective it’s weaker compared to surpluses that peaked around 0.5% GDP in late 2023 but it’s still favorable in light of the 1-3% deficits typically run in pre-pandemic years.
• With Canada-US trade relations so keenly in the spotlight, the Canadian merchandise trade surplus to the US increased from C$6.6bn to C$8.2bn in November and continued to equate to 3.3% GDP on a twelve-month running basis.
• The latter is down from a recent high of 4.5% GDP in mid-2022 but remains notably above the 2% GDP averaged through the first Trump administration. 

MNI spoke with the head of the ISM's service survey about the outlook under the Trump administration. On Main Policy Wire now, see sales@marketnews.com for details.