Treasury Strips Reach 14-Year High as Volatility Drops
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The outstanding amount of zero-coupon U.S. Treasury notes and bonds jumped to the highest level in more than 14 years as low yields and weak market volatility spurred demand from pension funds and insurance companies looking to match assets with liabilities.
Zero-coupon debt, or strips, short for separate trading of registered interest and principal securities, is created by Wall Street firms that split bonds into their face amount and individual coupon payments. The amount climbed to $214 billion in June, the most since October 1999, according to Treasury Department data released yesterday. The 2.3 percent jump was the biggest gain since February 2013.