Warren Buffett, Flush With Cash, Also Owns More Treasury Bills Than the Federal Reserve

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โ€˜We wonโ€™t spend it unless we think theyโ€™re doing something that has very little risk and can make us a lot of money,โ€™ Warren Buffett stated.

As Warren Buffettโ€™s Berkshire Hathaway strategically sells shares of companies such as Apple for cash, it is parking hundreds of billions in U.S. Treasury bills (T-bills), and now owns more of them than the Federal Reserve.

In the second quarter, Berkshire purchased an additional $81 billion in T-bills, short-term U.S. government debt securities that range from four weeks to 52 weeks, bringing its total holdings to $235 billion, according to the firmโ€™s earnings release on Aug. 3.

As a share of the roughly $5.7 trillion outstanding short-term debt securities, the Omaha-based investing titan owns 4 percent of all T-bills issued to the public.

The company started accumulating T-bills in the first quarter of 2022 when the Federal Reserve started raising interest rates.

By comparison, the Fedโ€™s T-bill pile is $195.29 billion as of July 31, based on the institutionโ€™s data. To put this in perspective, however, the Fed still holds approximately $4.5 trillion in U.S. Treasury notes and bonds, with maturities from one to 10 years or longer. 

The Fedโ€™s holdings of bonds and mortgage-backed securities ballooned over the past 15 years, starting with the financial crisis of 2008โ€“09 and escalating during the COVID-19 pandemic, from around $800 billion in 2007 to a peak of almost $9 trillion 2022, according to data compiled by Statista. It has recently reduced its holdings to about $7.3 trillion, but remains the largest single buyer of U.S. Treasury securities in the world, by far, according to the Peter G. Peterson Foundation. 

While T-bills are typically unappealing to investors compared to higher potential yields available in the stock market, the Fedโ€™s recent rate hikes have made them more attractive. In the aftermath of lifting the benchmark policy rate to a range of 5.25โ€“5.5 percent, the return rates on these investments are the highest they have been since February 2007.

The one-month yield is about 5.3 percent. The six-month yield is around 4.9 percent, and the one-year yield is 4.43 percent.

Byย Andrew Moranย andย Kevin Stocklin

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