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Joseph Wang, macro analyst / blogger at Fed Guy, observes that artificial intelligence-related debt is not crowding out U.S. Treasuries. Wang notes that if this were occurring, dealers would likely need to warehouse more Treasuries. However, he points out there has not been an increase in dealer coupon holdings and swap spreads have remained stable. Wang also mentions that higher yields are contributing to policy uncertainty.
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Joseph Wang previously reported that the U.S. Treasury had used all assets in its Exchange Stabilization Fund to buy yen. He has also noted that government policy plays a key role in determining U.S. interest rates. These observations provide further context for Wang’s recent analysis of Treasury market dynamics.