Britain's global trade deficit in goods unexpectedly shot up in June to its highest level since last November as exports to countries outside Europe fell sharply, new figures show.
As evidence mounts in the United States of an economic revival, expectations of a rate cut at today's meeting of the Federal Reserve Open Market Committee have evaporated.
However, there are hopes that the Fed may offer some comfort to the suffering bond traders in the statement it releases to accompany its interest-rate decision.
Since the middle of June, there has been a 40 per cent rise in the yield of the 10-year treasury bond, from 3.116 to 4.37 per cent. A further significant rise, economists said, would start to undo the US central bank's good work in cutting rates.
Mr Marc Chandler, chief currency strategist at HSBC in New York, said the Fed should try to calm nerves in the bond market.
"If 10-year yields rise another 50 basis points, it may start to dampen the recovery in the US economy," he said.
Economists said the statement would need to tread a fine line, providing encouragement to the recovering equity markets without alarming jittery bond markets.
Confidence in the Fed among bond investors has reached a low ebb.
Many blame the central bank for encouraging a rally in May by raising fears of deflation only to puncture bonds in June by cutting rates by just a quarter point and hinting that the threat of falling prices was receding.
Despite signs of a pick-up in growth, most economists believe a revival of inflation remains a distant prospect.
The output gap - the difference between actual and potential output - is continuing to rise.
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