Corporate America Bets on Fed Cuts With Longer-Dated Holdings

Companies are moving some of the excess cash on their books into longer-term securities, betting that rate cuts from the Federal Reserve will make these holdings more lucrative.

Firms this year have cut allocations to cash and other liquid investments, such as money market funds, to just 27% of holdings through the end of August, on average down about 13 percentage points compared with the end of 2022 after the Fed started hiking rates, according to investment software firm Clearwater Analytics.

At the same time, corporate allocations to US Treasury debt maturing in more than 90 days are higher than ...