According to recent Data from the Federal Reserve, the super-rich hold fewer Treasury and municipal debt than they did nearly two decades ago.
Such assets held by the top 1 per cent of households by income totalled $887bn as of June, the lowest in 17 years and well below a peak of $1.5tn a decade ago.
Americans in other income groups have also been trimming their Treasury and municipal debt holdings. Holdings peaked at about $3tn in June 2019 and have fallen by nearly $400bn since then.
High earners have traditionally preferred to buy municipal bonds to get the tax break on interest income.
But with Treasury and municipal yields near historic lows, they may “look for higher yield elsewhere, such as equities, high-yield or investment-grade debt, private credit, cryptocurrencies,” said Peter Boockvar, chief investment officer at Bleakley Advisory Group.
The yield on the benchmark 10-year Treasury is now around 1.55 per cent, above the all-time low set last year but far from its long-term average. Inflation, meanwhile, has been above 5 per cent for months.
Stifel Nicolaus&Co. Chris Ahrens, strategist at Merrill Lynch, said:
“High-income people are probably well aware that they have negative real returns on Treasury and municipal debt.”
The top 20% of wealthy households hold 74.2% of Treasurys and municipal securities, the lowest level on records going back to 1989, according to Fed data.
Reprint indicated source：Shine Trader Limited Live information