The US government ran a $409 billion deficit in October, the first month of fiscal 2027, the Congressional Budget Office said. The gap landed as Treasury yields climbed after hotter October inflation, with the 10-year yield near 5% on Tuesday evening.
MoneyTurkey Bonds Desk | 10 November 2026, yields as of about 19:00 UK time
Key points
- The CBO estimated October’s deficit at $409 billion, $125 billion more than in October 2025.
- Revenues were $36 billion lower and outlays $89 billion higher than a year earlier.
- The 10-year Treasury yield was near 5% at about 19:00 UK time, after the hot October CPI report.
What happened
The CBO’s monthly budget review put the October shortfall at $409 billion, or more than $100 billion a week, according to Fortune. Revenues fell by $36 billion from a year earlier while outlays rose by $89 billion, The Fiscal Times reported.
Part of the jump is a calendar effect. Some federal payments due on 1 November were made in October because that date fell on a weekend in both 2025 and 2026. The CBO said that, adjusting for those shifts, the year-on-year increase in the deficit would have been even larger.
Why bond traders care
The numbers arrived on a day when Treasuries were already under pressure. Yields rose across the curve after October consumer prices came in hotter than forecast, and the 10-year yield traded near 5% by Tuesday evening, up more than 13 basis points on the day. A bigger monthly gap means more Treasury issuance to fund, adding supply just as inflation data push rate-hike expectations higher.
The CBO also put the fiscal 2026 deficit at $1.9 trillion, or 6.2% of GDP, up from 5.8% a year earlier and well above the 50-year average of 3.8%. Interest on the public debt came to $1.14 trillion for the year, Fortune reported.
The Committee for a Responsible Federal Budget, which pushes for smaller deficits, called the start to the year alarming and urged Congress to avoid new deficit spending ahead of the 11 December government funding deadline.
What to watch
- The Treasury’s Monthly Treasury Statement for October, which will firm up the CBO estimate
- The 11 December deadline to fund the government
- Pricing for the December Fed meeting after the hot CPI report
- Whether the 10-year yield holds near 5%
Related on MoneyTurkey
- Treasuries Slide as Hot CPI Lifts December Hike Odds
- Live: Stocks pare losses as the 10-year yield eases to about 5%
For information only. Not investment advice.
Sources
- Fortune, via Yahoo Finance: After a summer of reorganizing national debt, the Treasury borrowed more than $100 billion a week in October
- The Fiscal Times: Budget Deficit Tops $400 Billion in First Month of New Fiscal Year: CBO
- Congressional Budget Office: Monthly Budget Review, October 2026
- Yahoo Finance: 10-year Treasury yield jumps as odds of rate hike rise
