The Financial Times reported that JPMorgan Chase (JPM.US) has withdrawn nearly $350 billion from its Federal Reserve account since 2023, investing most of it in U.S. Treasuries to counteract the erosion of profits from interest rate cuts.
The report cites BankRegData data, indicating that JPMorgan's balance in its Federal Reserve account decreased from $409 billion at the end of 2023 to $63 billion in the third quarter of this year. During this period, the bank's holdings of U.S. Treasuries increased from $231 billion to $450 billion, allowing it to lock in higher yields before the central bank's interest rate cuts.
The report notes that JPMorgan avoided significant investments in long-term bonds during the low interest rates of 2020 and 2021, unlike competitors such as Bank of America (BAC.US), which suffered severe paper losses when interest rates surged in 2022. It also mentions that JPMorgan's stable deposit base allowed it to earn returns from the Federal Reserve that far exceeded the interest paid on deposits during the high interest rate period