Fed staff find dealer client financing persists beyond inventory clearance

Community Trust Score Verified 83 % Real Verified 47 votes Updated 47 seconds ago Federal Reserve staff research published on Oct. 30 finds that Treasury dealers continue to finance customer bond positions even after their own auction inventory has largely cleared. The study indicates that this lingering lending activity relies on balance-sheet capacity rather than the physical holding of securities, meaning that falling dealer inventories may not fully reflect their ongoing ability to support the Treasury market. The research estimates that each dollar of Treasury coupon issuance expanded dealer balance sheets by approximately 21 cents.

Source: The Currency Analytics