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The Federal Reserve has increased its U.S. Treasury holdings to the highest level since July 2024, as record debt issuance keeps pressure on bond markets. The Kobeissi Letter, citing FRED data, said the Fed has bought $237 billion in Treasuries since December. Meanwhile, BlackRock’s Rick Rieder said stocks still offer stronger upside than interest rates.
The Fed’s Treasury holdings now stand at $4.4 trillion, according to the data cited in the report. That figure represents nearly 66% of its $6.7 trillion balance sheet. The increase comes as the central bank absorbs more Treasuries while the U.S. government issues large amounts of debt. The Kobeissi Letter described the move as active support for the Treasury market.
At the same time, the bond market continues to face heavy supply. Rieder, BlackRock’s Chief Investment Officer of Global Fixed Income, said the market is handling $520 billion a week in gross Treasury supply.
That level of issuance has placed the Fed’s balance sheet back at the center of market attention. It also raises fresh questions about demand for government debt as borrowing needs remain high.
Despite the Fed’s growing Treasury position, Rieder said equities have more upside than interest rates. He made the remarks during a Bloomberg interview. His view rests on a sharp difference between bond and stock market supply. The bond market faces large issuance, while the stock market has limited new supply.
‘We don’t create enough stocks,’ Rieder said. He pointed to corporate share buybacks, which continue to outpace initial public offerings.
As a result, fewer shares remain available for investors. At the same time, large amounts of cash remain outside the market.
Rieder also pointed to a divided U.S. economy. He said manufacturing and housing are effectively in recession, while other parts of the economy keep expanding.
He linked that strength to large AI investments and continued spending by higher-income consumers. These forces have helped the broader economy move ahead despite weakness in rate-sensitive sectors.
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Rieder expects the Federal Reserve to cut rates eventually because lower-income and rate-sensitive sectors remain under pressure. Still, he remains careful about extending duration in bonds. He expects the 10-year Treasury yield to fall to 4% over time. For now, BlackRock plans to wait in the belly of the yield curve.
That position reflects caution as the market looks for real motivation around lower mortgage rates. Until then, BlackRock appears unwilling to move too far out on the curve.
Federal Reserve Bank of St. Louis data showed the 10-year Treasury yield at 4.45% as of May 4, 2026. The iShares 7-10 Year Treasury Bond ETF, known by its ticker IEF, has fallen 2.02% year-to-date. IEF has also dropped 2.16% over the last six months. Over the last year, it remains unchanged, based on the data provided.
Meanwhile, U.S. borrowing needs remain large. Barron’s reported that the Treasury raised its April-to-June borrowing estimate to $189 billion from $109 billion.
The Treasury also projected $671 billion in borrowing for the July-to-September quarter. That outlook keeps attention on Treasury supply, Fed balance-sheet policy, and future rate guidance.
The Federal Reserve’s Treasury holdings have climbed to their highest level since July 2024 as U.S. debt issuance remains heavy. Rick Rieder sees stronger upside in equities than bonds, while Treasury yields and future Fed policy remain key market signals for investors.
