Investors Seek Safety in Cash Amidst Volatile Markets

Long-term institutional investors increased their cash allocations to 20.4% in September, as volatility in the Treasury market led to a selloff in stocks and bonds. This deviates from the traditional 60/40 portfolio construction, with investors opting to hold more cash instead. State Street Global Markets' report also showed a rise in fixed-income allocations to 28.5% and a drop in equities to 51.1%. While cash holdings are above average, they remain below previous crisis peaks. The surge in short-term Treasury yields has given investors the opportunity for higher yields, but it has also created price pressures on older bonds.