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Who's the Biggest Buyer of Treasuries?

We are spending way too much time worrying about the Fed.

--Taper or keep buying?
--Is $85 Billion the right amount?
--Why September?
--What will Bernanke's successor do?


The Fed only owns 15.1 percent of all outstanding treasuries. Banks own more, and foreigners own a lot more. We're all wringing our hands over what is effectively a third tier player.

Bond strategist Joe Kalish of Ned Davis Research shares the data in his morning note. He further examines the changing ownership patterns over time, noting most especially U.S. households have cut their treasury holding by 50 percent over the past 15 years. We've also witnessed some notable changes during the past several years:

Notice who's been buying more: Financial entities. Banks both here and abroad have increased their combined Treasury holdings by four percentage points since 2011, effectively parking deposits in government securities given tepid loan demand. We suspect this will change as the global economy recovers, reducing demand for treasuries. Joe sees further changes in the near future:

Bloomberg regularly surveys 66 strategists for their bond forecasts. Currently they estimate a move to 3.23 percent by the forth quarter of next year. As we look at a five year chart of the 10-year, noting how much time yields hovered between 3.50 percent to 4 percent, we wonder whether their forecast is bold enough.

Look past the taper. What do YOU see?

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