The Overshoot

The Overshoot

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The Overshoot
The Overshoot
Who Has Been Buying U.S. Treasury Debt?
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Who Has Been Buying U.S. Treasury Debt?

"Households and nonprofits" have absorbed the entire increase in the supply of marketable securities since the start of 2022. But who is that, really?

Matthew C. Klein's avatar
Matthew C. Klein
Jun 24, 2023
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The Overshoot
The Overshoot
Who Has Been Buying U.S. Treasury Debt?
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The U.S. Treasury borrowed about as much in 2022Q2-2023Q1 ($1.02 trillion) as it did in 2018 ($1.13 trillion) and 2019 ($1.06 trillion). The sources of financing have changed dramatically as bond prices plunged. Compared to 2019 or the first years of the pandemic, the newest crop of buyers most closely resembles those who stepped up in 2018, when rising interest rates encouraged relative value hedge funds and securities dealers to fill in for the Federal Reserve as it ran down its bond portfolio.

Net purchases of marketable securities by “households and nonprofits” have soared, more than offsetting sales and redemptions by money market funds, the Federal Reserve, and banks. State and local governments continued to add to their stockpile, albeit at a slower pace than when they were getting massive grants of aid from the Treasury. And “security brokers and dealers” have ramped up their net long positioning to new highs after having cut back sharply in 2021. The shift towards more opportunistic buyers is consistent with the jump in interest rate volatility.

What follows is a more detailed look at the major buyers and sellers of Treasury debt by sector.

“Households and Nonprofits”: Hedge Funds By Another Name?

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