Treasury Budget

DEFINITION of 'Treasury Budget '

Data released by the U.S. Treasury on a monthly basis that accounts for the surpluses or deficits of the federal government. Treasury budget data tracks the changes in monthly balances as an indicator of budget trends and the direction of fiscal policy.

The annual Treasury budget process starts in January and is usually proposed in April as the President's Budget.

BREAKING DOWN 'Treasury Budget '

As the deficit increases, more Treasury notes and bonds are sold to finance the government's operations. If demand remains constant and supply increases, the value of the instruments goes down. Alternatively, the opposite occurs when the deficit increases (or there is a surplus). If demand remains constant and supply diminishes, the price of these government debt securities should increase.

Lower prices in bonds and notes equates to higher yields for the investor. Higher yields in the market means the government must issue Treasury securities at higher interest rates. When these risk-free rates are increased, the effect is seen across all debt markets, and a high interest rate environment is born. This is bearish for the equity markets.

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RELATED FAQS
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    Discover the countries with the largest budget deficits and what it means. Deficits are influenced by the economy and also ... Read Answer >>
  4. Why are treasury bond yields important to investors of other securities?

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  5. What is the effect of a fiscal deficit on the economy?

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