JPMorgan Chase (JPM) is shifting billions from the Federal Reserve into U.S. Treasuries to lock in higher yields and protect profits as interest rates fall. Since the end of 2023, JPMorgan has withdrawn almost $350 billion from its account at the Fed. Its cash balance there dropped from $409 billion to about $63 billion by the third quarter of this year.
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At the same time, the bank sharply raised its holdings of U.S. Treasuries, increasing them from $231 billion to roughly $450 billion.
The move reflects JPMorgan’s effort to protect earnings as interest rates fall. Buying Treasuries now allows the bank to lock in higher yields before further rate cuts take effect.
Rate Cuts Change the Math
The Federal Reserve raised interest rates quickly from near zero to above 5% starting in 2022. In late 2024, the central bank began cutting rates and has signaled that more cuts may follow. Earlier this month, rates dropped to their lowest level in three years.
As yields decline, holding large cash balances at the Fed has become less attractive, pushing banks like JPMorgan to look for better options.
“It’s clear JPMorgan is moving money from the Fed into Treasuries,” said Bill Moreland, founder of BankRegData. “Rates are going down, and they’re acting ahead of time.”
Is JPMorgan a Good Stock to Buy?
Turning to Wall Street, analysts have a “Moderate Buy” consensus rating on JPM stock based on 10 Buys and seven Holds assigned in the past three months, as indicated by the graphic below. Furthermore, the average JPM price target of $336.15 per share implies 6.53% upside potential.
