US deficit nears $2 trillion as 10-year Treasury yield tops 5%

The U.S. budget deficit reached $1.992 trillion in fiscal 2026, up 12% from a year earlier, as the 10-year Treasury yield climbed to 5.1% and intensified pressure on borrowing costs. The gap equals about 6.2% of gross domestic product, far above Treasury Secretary Scott Bessent's goal of cutting it below 4% by the end of President Donald Trump's term. Higher long-term yields have fed through to the housing market, where the average 30-year fixed mortgage is hovering around 7.5%. Redfin said pending home sales fell 4% in September, the biggest monthly drop in three years. CNBC said investors are demanding more yield as federal debt issuance rises and oil prices jump during the war with Iran.