When investors think of the financial markets, the first thing that likely comes to mind is the stock industry.
But there is a bigger, less-flashy counterpart to the equity industry: the bond industry. At the heart of the fixed revenue space lies U.S. Treasurys, one of the safest investments in the world.
“We have not paid attention to the Treasury industry because it was a industry for foreigners or for the Fed,” said Priya Misra, fixed revenue collection of investments manager at J.P. Morgan Asset Management. “Now it’s a industry for all of us, and it’s giving you better yield. So it’s something which we should not ignore.”
Buyers of U.S. Treasurys have been changing, with major players including China, Japan and the Federal Reserve seeing their respective holdings decline in recent years. The shift could have broad implications for the U.S. economy.
“What we’re observing is that [the new buyers] are a lot more price sensitive,” said Anders Persson, global fixed revenue chief funding officer at Nuveen. “They’re just not quite as sticky.”
Watch the video above to find out more about why major buyers are fleeing the U.S. Treasury industry, the impact on yields and the economy at large, and how investors can best navigate the industry going forward.
Chapters:
0:00 Introduction
1:56 The $26.5 trillion U.S. Treasury industry
3:29 Who are the buyers?
4:48 Changing of buyers
7:32 Impact on the economy
9:58 What’s next?
Produced by: Jeff Huang
Graphics by: Christina Locopo
Narrated by: Jordan Smith
Supervising Producer: Jeff Morganteen
Additional Footage: Getty
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Why China, Japan And The Fed Are Shaking Up The $26 Trillion U.S. Treasury industry
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