ES Monday 7-28-2014 : Hot Topic

Treasury Budget

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Definition of 'Treasury Budget'

During the second week of the month the Financial Management Service at the United States Department of Treasury release a monthly account of the surplus or deficit of the federal government. Data is for the previous month; January's figures are release in February.

The annual fiscal year begins in October and changes in the budget balance are followed as an indicator of budgetary trends and the impact of fiscal policy.

Budget deficits and surpluses are watched closely because they will directly impact the issuing of T-Bills,T-Notes, T-Bonds. If the federal government is running a deficit then more treasuries will need to be issued to finance this deficit which will increase the supply of treasuries and theoretically reduce the demand. Conversely if there's a budget surplus then the supply of treasuries should shrink causing an increase in bond prices as supply falls relative to a constant demand.

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