Instead of investing in the stock market, invest in the bond market? U.S. households hold U.S. Treasury bonds at highest level in 25 years

Zhitong Finance APP has learned that since the Federal Reserve began raising interest rates last year, American households have invested heavily in the US Treasury bond market of approximately US$25 trillion.

Their holdings surged to about $2.5 trillion from less than $1 trillion when the Fed begins raising interest rates in 2022, reaching their highest level in the past 25 years, according to Apollo Global Management chief economist Torsten Slok. .

"The bottom line is that U.S. households find current U.S. Treasury yields attractive," Slok wrote in emailed comments on Friday.

The yield on the 10-year U.S. Treasury note has risen sharply recently to nearly 4.5%, the highest level since the end of 2007, and has become the focus of Wall Street's attention. Big tech stocks and other rate-sensitive sectors of the market were sold off sharply after the Federal Reserve signaled it might keep policy rates at expected higher levels for an extended period of time.

Although a slight pullback in the 10-year Treasury yield on Friday provided some support to the U.S. economy, the stock market still suffered heavy losses this week.

The S&P 500's consumer discretionary sector led the way down 5% through Friday. That could be a sign that investors believe companies focused on luxury goods, such as cars, furniture, vacations and other discretionary items, may be affected by the economic downturn.

Shares of Tesla (TSLA) are down more than 7% for the week, while Amazon (AMZN) is down about 6.7%, and the rest of the "Big Seven" stocks that have outperformed this year are also down since Monday. .

Higher borrowing costs not only weigh on consumers, they also threaten large companies facing large debt maturities in the coming years. The older, lower-coupon securities in the portfolio also look less valuable now.

Some of the bond market's gains have been wiped out as yields rise, with the benchmark Bloomberg U.S. Aggregate Index returning -0.6% this year through Friday and -14.4% over three years, according to FactSet data . The iShares U.S. All Bond ETF (AGG.US) has fallen 2.1% so far this year.