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Banks rush out of Treasurys

  • Contrarian Treasury bulls will delight in knowing banks are trimming their holdings of U.S. government debt for the first time in six years. Now owning $1.8T of Treasurys (vs. 1.89T a year ago), banks' holdings of government paper of less than 70% of cash is the lowest since the Fed began compiling the data in 1973.
  • Citigroup cuts its Treasury holdings 10% this year to $82.6B. Bank of America cut by 88% to just $2.97B.
  • “Like a lot of other people who have been moving out of fixed income, it’s largely to avoid the fallout from tapering," says Thornburg's Jeff Klingelhofer. Yes, but what about the possibility banks are finding more profitable things to do besides lending to the government? Not so at least at the community bank level, says consultant Jeff Caughron. "Lending has not picked up a great deal ... (community lenders), by and large, are taking advantage of the steeper yield curve and putting more money to work in the bond market.”
  • Treasury ETFs: TBT, TLT, TMV, SHY, IEF, TBF, PST, EDV, TTT, TMF, TLH, ZROZ, SBND, IEI, DLBS, TYO, DTYS, VGLT, UST, SHV, BIL, UBT, TLO, TBX, VGSH, VGIT, GSY, LBND, DTYL, SCHR, SCHO, TYD, TENZ, ITE, TYBS, DTUL, TUZ, FIVZ, SST, DTUS, TBZ, DFVL, DLBL, DFVS, TYNS
Comments (4)
  • Chris DeMuth Jr.
    , contributor
    Comments (4035) | Send Message
     
    Here is my favorite way to exploit this idea for profit: http://seekingalpha.co...
    2 Dec 2013, 09:04 AM Reply Like
  • joelkatz
    , contributor
    Comments (448) | Send Message
     
    Glad to be in with TMV
    2 Dec 2013, 09:07 AM Reply Like
  • DeepValueLover
    , contributor
    Comments (8140) | Send Message
     
    The Fed is happy to buy what the commercial banks are selling.

     

    ...don't expect this buying to slow down anytime soon.

     

    If T-Bonds were cocaine then Janet Yellen would be Rick James.
    2 Dec 2013, 10:32 AM Reply Like
  • joelkatz
    , contributor
    Comments (448) | Send Message
     
    Are you able to give a timing when taper will happen? if not I'm shorting 10 yr bonds as of now going for the next twelve months.
    2 Dec 2013, 10:53 AM Reply Like
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