Warren Buffett now has more T-bills than the Federal Reserve

48
Warren Buffett now has more T-bills than the Federal Reserve

“Warren Buffett’s T-Bill Haul: Surpasses Federal Reserve’s Holdings”
Here is the rewritten content without HTML tags:

Berkshire Hathaway now holds more Treasury bills than the US Federal Reserve as Warren Buffett boosted his cash fortress to record levels. The Omaha, Nebraska-based conglomerate had $234.6 billion in short-term investments in Treasury bills at the end of the second quarter, while it had more than $42 billion in cash and cash equivalents, including T-bills with maturities of three months or less, according to its quarterly financial report. In comparison, the Fed held $195.3 billion of T-bills as of July 31. The central bank held $4.4 trillion in Treasury securities that include notes, bonds, and inflation-linked securities.

The Fed was a big buyer of government debt during the pandemic. Buffett, 93, made a surprising and yet far-sighted move by selling large amounts in stock holdings, including Apple, last quarter, ahead of the massive global sell-off this week. Berkshire has been selling stock for seven consecutive quarters, but that selling has increased over the last period, when Buffett lost more than $75 billion of equity in the second quarter. Many loyal Buffett watchers saw the decision to sell his top holdings as a warning, as the Oracle of Omaha was turning bearish on the economy and markets.

Buffett has mentioned in the past during times of crisis that he would buy Treasury bills directly at auction. The government sells T-bills for durations ranging from four to 52 weeks. Buffett’s massive war chest has generated considerable returns as Treasury yields surged over the past two years. If invested in 3-month Treasury bills at about 5%, $200 billion in cash would earn about $10 billion per year, or $2.5 billion per quarter.

After the COVID-19 pandemic sent markets into a tailspin, the central bank bought about $5 trillion of Treasury and mortgage bonds to aid the economy. But the Fed is reducing its asset holdings beginning in June 2022, a process widely known as quantitative tightening. The Fed seeks to promote maximum employment and stable prices by independently setting monetary policy. This includes buying and selling Treasury securities held by the public to control the money supply and interest rates.