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Treasury Strips Demand Surges But May Be No Match for Supply

April 7, 2021, 5:10 PM

Demand for U.S. Treasury Strips exploded in March. Whether it will keep pace with the boom in supply is an open question.

Treasury bonds held as Strips rose by $10.3 billion in March, the biggest monthly increase since October 2018 and the second-highest on record, according to U.S. government figures released Tuesday.

Demand for the products -- zero-coupon bonds created by treating a regular bond’s principal and coupon payments as individual securities -- tends to surge after equities outperform fixed-income, prompting pension funds to lock in gains by moving money into Strips. The highest pension funded ratios since 2008 probably...

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