The U.S. trade gap widened to near a three-year high in May on a jump in oil prices boosted imports to their second-highest level ever.

KEY POINTS: * The trade deficit totaled $50.2 billion, the highest since October 2008, and well above the consensus estimate of $44.0 billion from Wall Street analysts surveyed before the report. * Imports rose 2.6 percent to $225.1 billion, the highest since the record of $231.6 billion set in July 2008 just before the global financial crisis took a huge toll on global trade.

COMMENTS:

DAVID ADER, HEAD OF GOVERNMENT BOND STRATEGY, CRT CAPITAL GROUP, STAMFORD, CONNECTICUT:

The (Treasuries) market is off a little post this number with yields very slightly higher evenly across the curve. It's not really about trade as even as a detraction from GDP -- a weak quarter is already in the mix -- but notable that this wisp of soft news isn't helping. To be fair, we've rejected most of the overnight strength anyway proving the price action was not about the United States.

DAVID SLOAN, ECONOMIST, IFR ECONOMICS, A UNIT OF THOMSON REUTERS

May's trade deficit of $50.2 bln was dramatically above April's $43.6 bln (only marginally revised from $43.7 bln) and a market consensus of $44.0 bln. The deficit is the highest since October 2008. The higher than expected May deficit should be seen alongside a lower than expected April deficit. The average monthly deficit in Q2 to date of $46.9 bln is the same as the average monthly deficit in Q1, while in real terms both months in Q2 are delivering lower deficits than each month in Q1. This means net exports should still be a positive in Q2 GDP, if to a large extent on the impact of the Japan disaster which will be depressing other GDP components. Still, that the May deficit is so far above economists' expectations will reverse any upgrades to Q2 GDP projections that came with the recent strong wholesale inventories data, with a second straight quarter of sub-potential GDP growth looking likely.

Japan Energy