White House: Record deficit coming
Next year's deficit was previously estimated at $409 billion. But war expenses and the slower economy have combined to drive the expected number much higher. The previous record deficit (in dollar terms, rather than as a percentage of GDP), was $413 billion in 2004.
Will it be necessary to sell boatloads of U.S. Treasuries to fund that deficit, driving interest rates higher over the long term? We'll see. In the here and now, bond traders are clearly more concerned about falling stock prices and ongoing credit tremors. The long bond futures were recently up 1 5/32 in price, while 2-year Treasury Note yields were down 12 basis points to 2.59%.