I don't know that it was necessarily a desire to not invest and stay in low earning cash.
I know in our case, we found no good investment choices in the market. No municipals
and mortgage back bonds way too thin on spreads. It is unlike any time in our banking careers.
Record low cost of funds, high liquidity and no place to really go with the money.
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Original Message:
Sent: 11/17/2021 12:43:00 PM
From: Barb Rehm
Subject: Banks Bought Fewer Securities in Q3 in Anticipation of Higher Rates
A preference for holding cash over investing in securities became clear in the third quarter, according to this week's complimentary post from S&P Global Market Intelligence. Banks over $50 billion in assets, in aggregate, increased cash holdings by twice as much as securities holdings – a $157 billion increase in cash and its equivalents compared to $70 billion increase in securities. Cash increases outpaced bond holdings growth at 15 of the 27 institutions, Market Intelligence reported. That is a switch from the second quarter, when most of the big banks added more securities than cash.
How about you? Is your bank making a similar shift? Why/why not?
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Barb Rehm
Senior Managing Director
IntraFi Network
Arlington VA
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