THE GOVERNMENT said yesterday that the trade deficit declined 25 percent between October and November. That was good news, especially as to robust exports. The administration celebrated and the dollar and the stock and bond markets rose.

Not to be the skunk at the garden party, it is important to keep the events of the day in perspective. The monthly figures are notoriously volatile. November looked so good in part because October looked particularly -- artificially -- bad. The monthly total for November, understandably greeted with joy, is greater than the annual trade deficit just a few years ago. A few years before that there was a surplus.

The deficit does nevertheless appear to be working its way down. That is mainly in response to the lower value of the dollar, which makes foreign goods less competitive here and U.S. goods more competitive abroad. That in turn is further evidence that what matters most in trade is the fundamentals -- the relative strength of economies -- and not the sort of kneeing and gouging that the trade bill in Congress would mainly do. The lesson for Congress is to back off.

But the fundamentals take time; nor, by any means, are they entirely in order yet. The November figure still means the United States must borrow $13 billion a month from the rest of the world. That is how these deficits are financed.

The need to borrow means that the Federal Reserve Board must keep interest rates and the dollar high enough to attract the necessary capital. But the higher interest rates are kept, the more U.S. economic growth is restrained -- and the higher the dollar, the harder it is to reduce the trade imbalance, which is the problem in the first place.

That is the policy dilemma, made worse by the fact that this is an election year and the budget deficit is, for all the rhetoric that you will hear, stuck above $150 billion. If the federal government were not competing in the market for this much money, the Fed would need to draw less from abroad, and would be freer to help the domestic economy expand.

The tension in the markets as they overreacted to yesterday's news is itself evidence of how difficult this balancing act has become. A fleck of bad news can set prices plummeting. The trade news was welcome, but it's still not a comfortable world we live in.