Banks Piling Back Into Everything From Mortgage Debt to CLOs

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.