MNI BRIEF: Dealers Dropped $118 Bln in Treasuries in 3 Weeks

US primary dealers have continued to drop Treasuries, data released Thursday showed, with holdings falling USD36.9 billion in the week to March 17 alone.

Primary dealers' holdings of Treasuries dropped by USD118 billion over 3 weeks to USD132 billion in the week through March 17, according to New York Fed data. The decline came as primary dealers shed USD16.1 billion in the week to March 10 and a record USD64.7 billion in the week before. Declines in the most recent week were focused on the short-end of the curve, with bill holdings falling by nearly USD24 billion.

One explanation from market analysts is that dealers were taking steps to cut holdings before the end of a regulatory exemption on March 31 that the Fed ended as scheduled. The temporary relief on the supplementary leverage ratio allowed banks to expand their balance sheets with purchases of U.S. government bonds.