Commercial banks have boosted their holdings of Treasurys by $42B this year, according to Fed data, after culling their stakes for the first time in six years in 2013. Bank of America is the only lender of the five largest to publicly release a breakdown of available-for-sale assets said Treasury holdings ballooned to $29.6B in Q1 from $8.95B at the start of the year.
“The economic situation is still not fully bared out and they have to do something with their cash,” says fixed-income manager Jeffery Elswick. “Banks have been big buyers of Treasurys. They need safe assets.”
Treasurys overall have returned 2.2% YTD vs. a 3.4% loss in 2013, but the money's really been made in the long end, with 30-year bonds returning 10.8% - the best start to the year since at least 1988, according to BAML data.
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