Wall Street Dealers' US Treasury Holdings Hit Highest Level Since 2007

Wall Street primary dealers have increased their US Treasury holdings to the highest levels since 2007, supported by a shifting regulatory landscape and dealer capacity expansion. Meanwhile, the yield on the benchmark 10-year U.S. Treasury note remained broadly unchanged at 4.358% as investors pivot their focus toward the upcoming Federal Reserve interest rate decision. This stability follows a 7-year note auction yielding 4.175%, where indirect bidders' share fell to 58.35% while direct bidders surged to 30.0%. Energy prices continue to act as a primary driver of bond market volatility, adding macro uncertainty to the prevailing expectation that the Fed will hold rates steady. Market participants are closely monitoring how dealer balance sheets will absorb new supply amid fluctuating investor appetite. These structural shifts suggest a complex transition for Treasury liquidity as the market awaits further guidance from the FED.