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Data released on Wednesday, showed the US trade deficit in June narrows to 50.7B, as exports surged by a record pace. Analysts at Wells Fargo warn that exports remain further off their pre-virus level, and re-accelerating COVID-19 cases present downside risk to imports.

Key Quotes: 

“U.S. exports surged a record 9.4% in June, while imports rose a more modest 4.7%. Although exports rebounded more, causing the overall trade deficit to narrow, imports are just 15.2% off their pre-virus February level compared to over 25% for exports.”

“This report signals activity began to recover in June, but as COVID cases have re-accelerated domestically and abroad the question remains to what extent the rebound progresses. Barring renewed lockdowns, we expect a continued albeit modest recovery in Q3.”