U.S. Banks Hoard $2 Trillion of Ultra-Safe Bonds

While the buying may help to contain any jump in Treasury yields as the Federal Reserve moves toward raising interest rates, what it says about loan demand also has implications for how soon benchmark borrowing costs will rise this year. Minutes from the Fed’s January meeting released last week said than many policy makers were in favor of keeping rates lower for longer to avoid jeopardizing the recovery. Yields on five-year U.S. notes, which dropped as low as 1.15 percent last month, have since climbed as job and wage gains boosted the outlook for U.S. growth.



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