Fed Cuts Benchmark Rate Last Week
Further Rate Cuts Expected Next Year
JPMorgan Purchases Treasuries to Boost Returns
JPMorgan Chase has withdrawn approximately $350 billion (about 517 trillion won) of cash deposited with the Federal Reserve (Fed) and invested it in U.S. Treasury bonds. This move is interpreted as an investment based on the expectation that Treasury prices will rise if the Fed lowers its benchmark interest rate.
The Financial Times (FT) reported on the 16th (local time), citing BankRegData, that JPMorgan's cash deposits at the Fed plummeted from $409 billion (about 600 trillion won) at the end of 2023 to $63 billion (about 92 trillion won) in the third quarter of 2025.
During the same period, JPMorgan increased its holdings of U.S. Treasuries from $231 billion (about 236 trillion won) to $450 billion (about 658 trillion won). JPMorgan did not disclose information regarding the maturity dates of the Treasuries or details of interest rate swap contracts for risk management.
Last week, the Fed cut its benchmark interest rate by 0.25 percentage points, lowering the policy rate target range to 3.5-3.75% per year, the lowest level in three years. After the COVID-19 pandemic, the Fed had sharply raised the benchmark rate to over 5% from 2022 to early 2023. It began cutting rates in the second half of 2024.
Bill Moreland, founder of BankRegData, said, "It is clear that JPMorgan is moving cash deposited at the Fed into U.S. Treasuries," adding, "JPMorgan is taking preemptive action ahead of the anticipated rate cuts."
Meanwhile, during the low interest rate period of the COVID-19 era (2020-2021), JPMorgan refrained from making large-scale investments in long-term bonds. At that time, the bank was able to generate high returns by utilizing cash deposited at the Fed. In contrast, Bank of America suffered massive losses from bond investments during the rate hike cycle in 2022.
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