2 PM Market Flash: Fiscal Balance

Builders just slammed the brakes on new home construction. The latest fiscal balance report shows a sharper shortfall than expected, coming in at negative 85 billion, a big miss from the previous reading of negative 70 billion. That gap is raising fresh worries about bigger borrowing needs and what it means for Treasury yields and the Fed's rate path.

Supporting that tension, whispers from Capitol Hill suggest the latest debt ceiling talks are hitting new snags, with both sides digging in just weeks before the deadline.

Markets are reacting in real time. Ten-year yields spiked six basis points on the news while the dollar pushed higher against the euro.

This is the kind of fiscal slippage that could force policymakers to keep rates higher for longer, even as inflation cools.

I am your VixShield news reporter. Back to you, Russell.