The government's March deficit came in at $236.5 billion, bringing the fiscal-year-to-date deficit (ending in August) at $1.065 trillion and little changed from $1.101 trillion this time last year.

Year-to-date receipts are led by individual income taxes at $1.089 trillion followed by social insurance and retirement at $802 billion. Outlays are led by social security at $715 billion with net interest, at $429 billion, climbing at a fast rate.

Forecasters see a $340 billion deficit in March that would compare with a deficit of $296.3 billion in February this year and a deficit of $378.1 billion in March a year-ago. March is the sixth month of the government's fiscal year.

The U.S. Treasury releases a monthly account of the surplus or deficit of the federal government. Changes in the budget balance reflect Federal policy on spending and taxation. The government's fiscal year begins in October.

The budget data have several direct and indirect meanings for the financial markets. The most direct relationship lies between the size of the budget deficit and the supply of Treasury securities. The higher the deficit, the more Treasury notes and bonds the government must sell to finance its operation. From there it's simple supply and demand -- if demand is constant but the supply of bonds goes up, the price goes down. The same is true if the deficit falls or is eliminated altogether -- the government needs to sell fewer Treasury bonds, so the supply drops and the price of T-bonds rises. In the past few years, the budget deficit has increased dramatically, and this has put more Treasury securities into the market place.

The Federal government borrows money through the issuance of Treasury securities; so higher deficits mean a larger supply of securities and (again, assuming constant demand) lower prices. With notes and bonds, lower prices are equated with higher yields, so in this example, the government borrows money at higher interest rates. That impact ripples across all other interest rate-bearing securities and creates a higher interest-rate environment for stocks, which is bearish.

In addition to following the trend in the budget deficit or surplus, investors can gain valuable insight to the state of the economy by looking at the government's tax receipts. Higher tax receipts lead to an improved deficit situation when economic conditions are strong; conversely, lower tax receipts reflect a sluggish economic environment.