Tweet
http://online.wsj.com/article/SB1253...googlenews_wsj
In the second quarter, the most recent for which data is available, the Fed bought $164 billion out of the $339 billion in net new Treasurys sold.
In the mortgage-backed debt markets, the Fed has been buying upward of 80% of the bonds issued by agencies such as Freddie Mac and Fannie Mae.
Net issuance of fixed-income securities in the U.S. after the Fed's purchases is likely to have fallen by 25% in 2009 from last year to $843 billion, according to Barclays Capital estimates.
The Fed is slated to stop buying Treasurys at the end of October. And traders say a much bigger test will come when the Fed stops vacuuming up mortgage-backed debt, removing a big prop to the real-estate market.
[..]
Individual investors are among those gorging on Treasurys this year, data released by the Federal Reserve suggest. Households directly owned $606 billion worth of U.S. Treasurys, up from $576 billion at the end of the second quarter and $240 billion at the start of the year. That figure includes hedge funds, but analysts believe the buying binge has been more at the hands of individuals.
By comparison, holdings out of China -- a figure that has been closely watched for signs of change -- were essentially flat in the second quarter, rising to $776 billion from $768 billion.
Analysts believe the trend of U.S. households buying Treasurys has extended through the third quarter as investors migrate away from money-market funds, which are yielding a record low of 0.06%, according to iMoneyNet.
[..]
...many banks who would normally buy that debt are instead buying Treasurys. While Treasury yields are still slightly lower than those offered by mortgage-backed debt, banks aren't required to hold capital against their holdings of Treasurys securities, unlike debt guaranteed by Fannie or Freddie.
In the mortgage-backed debt markets, the Fed has been buying upward of 80% of the bonds issued by agencies such as Freddie Mac and Fannie Mae.
Net issuance of fixed-income securities in the U.S. after the Fed's purchases is likely to have fallen by 25% in 2009 from last year to $843 billion, according to Barclays Capital estimates.
The Fed is slated to stop buying Treasurys at the end of October. And traders say a much bigger test will come when the Fed stops vacuuming up mortgage-backed debt, removing a big prop to the real-estate market.
[..]
Individual investors are among those gorging on Treasurys this year, data released by the Federal Reserve suggest. Households directly owned $606 billion worth of U.S. Treasurys, up from $576 billion at the end of the second quarter and $240 billion at the start of the year. That figure includes hedge funds, but analysts believe the buying binge has been more at the hands of individuals.
By comparison, holdings out of China -- a figure that has been closely watched for signs of change -- were essentially flat in the second quarter, rising to $776 billion from $768 billion.
Analysts believe the trend of U.S. households buying Treasurys has extended through the third quarter as investors migrate away from money-market funds, which are yielding a record low of 0.06%, according to iMoneyNet.
[..]
...many banks who would normally buy that debt are instead buying Treasurys. While Treasury yields are still slightly lower than those offered by mortgage-backed debt, banks aren't required to hold capital against their holdings of Treasurys securities, unlike debt guaranteed by Fannie or Freddie.
Comment