Treasury Market Turmoil Puts Zero-Coupon Machine in Reverse
- U.S. bonds owned as Strips slumped in March from a record
- Fed’s resumption of QE opened the market for these bonds
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The U.S. debt market’s most violent month in years spurred a steep decline in the amount of zero-coupon bonds, Treasury Department data released Monday show.
Treasuries held as Strips -- a product that dealers create by divorcing a bond’s principal payment from its coupons and re-selling it as a zero-coupon security -- slumped $15.1 billion in March, the largest-ever slide, the data show. These bonds had risen to a record $339.6 billion in February.