Pensions, Asset Managers Can't Get Enough Long-Term Bonds: Chart

Federal Reserve policy normalization hasn’t slowed investor demand for long-term Treasuries, partly as pension funds may be shifting cash into duration products after locking in gains in equities, said Steven Zeng, a rates strategist at Deutsche Bank Securities. Their demand may explain why the amount of Treasury notes and bonds split into principal- and interest-only securities, known as Strips, jumped to a record in August, he said. At the same time, asset managers’ holdings of ultra-bond futures -- which designate Treasuries with maturities of 25 years or more for delivery -- have surged.

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