US July Deficit Hits $432 Billion as 10-Year Treasury Yield Eyes 4.75%-5%
Updated
Updated · ING Think · Aug 12
US July Deficit Hits $432 Billion as 10-Year Treasury Yield Eyes 4.75%-5%
3 articles · Updated · ING Think · Aug 12
Summary
$432 billion in July red ink added fresh pressure to Treasuries, helping keep yields elevated even after a benign U.S. CPI reading.
Higher real yields, not inflation fears, drove the move as markets had already priced a tame inflation backdrop and saw little reason to rally the long end.
The cumulative fiscal deficit has reached $1.8 trillion—about $170 billion above 2025—raising expectations of heavier issuance that could push up long-dated borrowing costs.
Tariff income had partly masked the gap, but refunds and a weakening underlying budget picture are now eroding that support.
ING sees the 10-year Treasury yield trending toward 4.75% to 5%, with a $25 billion new 30-year bond sale next as investors test demand.