US FY2026 Deficit Jumps 12% to $1.99T, Highest Since 2021

The US federal budget deficit widened 12% to $1.99 trillion in fiscal 2026, the largest since 2021, driven by higher spending and debt interest costs, plus a $145 billion customs refund to importers that cut net revenue. The fiscal deterioration signals persistent structural pressure on US debt dynamics, with implications for Treasury issuance and long-term rates. Uncertainty remains over whether the refund is a one-off or signals a shift in trade policy.