Source: Z1 Flow of Funds, US Federal Reserve

2016

• The biggest owner of US Treasuries (UST) are foreigners at 37.6% of total. Relative to other holders, their ownership actually peaked in 2008 at 44.2% and they have been net seller in the last two years.
• The second biggest owner of UST is the Fed at 15.4%. If we add state and local governments to it, the government, as a whole owns, 20.6% of UST.
• In the domestic sector, pension funds own the most at 14.5%, followed by mutual funds at 11% and households at 8.8%.

Over the years

Source: Z1 Flow of Funds, US Federal Reserve

• The ownership of UST has changed significantly over the years. For example, at the start of the data in 1945, the financial sector (banks, broker-dealers, etc.) owned 41.9% of the total; in 2016 that had fallen down to 4.8%.
• Households, the corporate sector and insurance companies have also substantially reduced their UST holdings over the years.
• Mutual funds and pension funds, on the other hand, have increased them.
• The elephant in the room, however, is the foreign sector, which in 1945 was the second smallest owner of UST (after mutual funds) at 1%. There was a big jump in foreign ownership in the 1970s and then starting in the mid-1990s.

T-Bills vs long dated US government securities

Source: Z1 Flow of Funds, US Federal Reserve

• Majority of US government debt has historically been in long-dated instruments.
• However, in the mid-1970s, there were about as many T-Bills as long-dated government paper. Nevertheless, over the last couple of years, the issuance of T-bills has declined to all-time low.