After making an encouraging bounce yesterday on rather discouraging news that gave reassurance that the Fed will continue its easy monetary policy, equity markets today are having much difficulty in keeping those gains made as the trade data presented earlier was rather mixed and as investors look for any bits of clues as to whether the Federal Reserve will begin trimming its monthly bond purchases.

Perhaps somewhat mixed was that the U.S. trade deficit increased, but below expectations in April, as exports increased at a slower pace than imports. According to the U.S. Department of Commerce, the trade deficit during April totaled $40.3 billion, increasing from the $37.1 billion reported for March and landing below the Street's consensus estimate of $41.0 billion. Clearly, the increase in the trade deficit will put pressure on gross domestic product for the second quarter; however, the fact that both imports and exports increased is certainly encouraging as it implies that there is demand from around the world after the prior month both imports and exports did decline. In terms of the two main components, exports increased 1.19 percent to $187.4 billion as overseas demand ramped higher for consumer goods, capital goods, and automotive goods. Imports climbed 2.41 percent to $227.7 billion as domestic demand increased for consumer goods, automotive vehicles, and capital goods.

At the moment, equity markets are trading slightly in losing territory with the Dow Jones Industrial Average down over thirty points. We expect to see continuing volatility as investors will be looking at all employment data for the rest of the week including ADP tomorrow, initial claims on Thursday, and last but not least the official government jobs data on Friday, and if the jobs number fails to land better than expected, markets could turn significantly lower.