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That's Peach Leaf Curl. You need to treat it with a copper spray over the winter and you can treat with a fungicide right now, following the directions on the package.

Don't use tools that touch that tree on any other tree until you have disinfected them. If the infected area is small you can remove the infected area and carefully destroy anything showing disease.

If you keep after it, you can get it cured, so don't panic.
 

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In the background there it looks like the tree might also have black knot disease, another fungus, so probably the same treatment for both problems. Peaches don't usually get black knot, but I googled and they can get it.
 
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