The US budget deficit reached $1.37 trillion through the first nine months of fiscal year 2026, with June alone adding $120 billion partly due to tariff refunds flowing back to importers. That nine-month figure already exceeds the full-year deficits recorded in several pre-pandemic years. A separate policy measure will seed $1,000 investment accounts for children born during the current presidential term, adding a new recurring spending line to the federal ledger.
A deficit running at this pace forces the Treasury to issue more bonds to cover the gap, which puts upward pressure on yields as more supply hits the market. Higher yields make borrowing more expensive across the economy, from mortgages to corporate debt, and weigh on valuations for growth-oriented stocks. Holders of long-duration Treasuries and rate-sensitive sectors feel this most directly.
Late July: Congressional Budget Office updated deficit projection. August: Treasury quarterly refunding announcement. September 30: End of fiscal year 2026, full-year deficit confirmed.
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