By Antonio @adobe Stock

Scott Carpenter of Bloomberg tells readers that banks are piling back into everything from mortgage debt to CLOs after two years of cutting back. Carpenter writes:

US banks are starting to ramp up purchases of everything from mortgage-backed securities to collateralized loan obligations after nearly two years of cutting back, adding fuel to a multi-month rally across credit markets.

Citigroup Inc., JPMorgan Chase & Co. and Bank of America Corp. have been boosting purchases of top-rated CLOs. Commercial bank holdings of mortgage bonds are also on the upswing, climbing 12 of the last 15 weeks, according to Federal Reserve data. It comes as Wall Street buyers added $41 billion of securities to their portfolios in the three months through December, according to data compiled by Citigroup, ending a streak that saw them shed more than $800 billion since March 2022, separate Fed data show. […]

Still, their renewed purchases are already having an impact, says Tracy Chen, who leads global structured credit investing at Brandywine Global Investment Management.

“Banks are really big players, and the fact they’re getting more involved means we can expect some tightening,” Chen said.

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