Chart of the Week
Nov 6, 2026
2 MIN READ
Fiscal pressures cloud the rate outlook
New
With roughly 75% of federal outlays tied to mandatory programs, newly-elected policymakers will have limited flexibility to address rising deficits and debt.
authors
Federal budget outlays: Mandatory vs. discretionary
Source: Congressional Budget Office.
- As investors assess the next Congress’s priorities following this week’s elections, policymakers face a challenging fiscal backdrop.
- The federal deficit sits at approximately 6% of GDP, while the national debt has surpassed $40 trillion.1
- Yet meaningful fiscal reform may prove difficult: Roughly three-quarters of federal outlays are tied to mandatory programs and interest costs, leaving a relatively small share subject to annual appropriations.1
- Treasury yields have retreated from recent highs, but persistent deficits and rising interest costs could pressure long-term rates even as monetary policy evolves.
- Higher yields offer core fixed income greater earning potential but may also create a less certain path for total returns.