Wall Street dealers’ Treasury holdings have surged to $550bn on average this year, the highest since 2007, as deregulation under the Trump administration encourages banks to re-enter the $31tn debt market. Holdings now account for nearly 2% of the Treasury market, up from below 1% in 2025, driven by eased capital rules. Analysts attribute this shift to the Federal Reserve’s relaxation of the enhanced supplementary leverage ratio (SLR), which reduced banks’ required capital buffers.

Michelle Bowman, Federal Reserve governor, led efforts to roll back post-2008 regulations, arguing they had overly restricted low-risk activities. Mark Cabana of Bank of America noted SLR changes have “had a material impact” on dealer holdings, with Morgan Stanley also increasing capital for Treasury trading.