Felix Nikolas Prehn: Corporate Bonds in Federal Reserve Wealth Data
The Federal Reserve’s household wealth files record positive holdings of corporate and foreign bonds in earlier decades and zero balances for every wealth group in the second quarter of 2026. The change concerns how this category appears in the published distributional series.
Felix Nikolas Prehn, economist and former investment banker, examines household holdings in The Hidden Regressive Tax, a September 2026 report from The Prehn Institute, an independent research institution he founded. The report, posted on Zenodo, includes corporate bonds among the possible destinations for funds following central bank bond purchases. Its distributional figures focus on other asset categories.
Felix Nikolas Prehn and the Portfolio Balance Channel
In The Hidden Regressive Tax, Felix Nikolas Prehn examines the portfolio balance effect as one route through which central bank purchases may affect asset prices. In the report’s account, when holders sell relatively safe bonds, they may place the proceeds in other securities, including corporate bonds and shares.
The report also records corporate shares and mutual funds held across wealth groups. Those figures record share ownership across wealth groups, within the report’s wider discussion of the securities that may receive funds following bond sales.
For the second quarter of 2026, the report records $0.37 trillion in corporate shares and mutual fund shares for the bottom half of households, compared with $32.89 trillion for the top 1 per cent.
The report records the difference between the two wealth groups. The top 1 per cent’s much larger recorded holdings of corporate shares show how ownership of one potential destination for reallocated funds differs across the distribution.
Felix Nikolas Prehn draws the corporate-share figures from the Federal Reserve’s Distributional Financial Accounts. The corporate and foreign bond figures below come directly from the Federal Reserve’s published distributional data files.
Securities Reported Across the Wealth Groups
The Distributional Financial Accounts separate US households into five groups, from the bottom half to the top 0.1 per cent. The records begin in the third quarter of 1989 and extend through the second quarter of 2026 in the data examined here.
In that latest quarter, the debt securities category reported $1.09 trillion for the top 0.1 per cent and $1.13 trillion for the remainder of the top 1 per cent. The next 9 per cent held $2.34 trillion, the next 40 per cent $1.16 trillion, and the bottom half $32.8 billion.
For each group, those reported totals equalled the corresponding holdings of US government and municipal securities. The separate corporate and foreign bond balance was zero in each of the five groups. These figures are balance-sheet levels, originally published in millions of dollars and rounded here.
The Federal Reserve’s corporate-share figures show a different distribution. The next 9 per cent held 40.7 per cent of the recorded household total, the largest share among the five groups. Corporate shares and mutual fund shares stood at approximately $16.2 trillion for the top 0.1 per cent and $374 billion for the bottom half.
Felix Nikolas Prehn uses four wealth groups in his report, retaining the top 1 per cent as one unit. The Federal Reserve’s files divide that group into two. These different groupings provide two levels of detail for comparing the distribution of recorded securities holdings.
Interpreting the Corporate Bond Line
The Federal Reserve describes the separate category as holdings of corporate and foreign bonds, with amounts reported in millions of dollars. For the second quarter of 2026, the published balances are zero across all five wealth groups. The corresponding percentage-share file carries no group allocation for that quarter, while the level series preserves each group’s reported observation.
Within the broader debt securities heading, government and municipal securities are listed separately from corporate and foreign bonds. These columns allow the components of the reported totals to be followed by wealth group and quarter. They also preserve the distinction between bonds issued by governments and those in the corporate and foreign category.
Felix Nikolas Prehn’s research on household asset ownership uses modelled estimates from the Federal Reserve’s Distributional Financial Accounts. The Federal Reserve combines household survey information with national financial totals to allocate assets across wealth groups.
The Federal Reserve’s classifications also specify that the corporate share series excludes holdings through defined contribution pensions. The wealth files also distinguish corporate shares and mutual funds from corporate and foreign bonds. Felix Nikolas Prehn uses the share holdings for the distributional comparison in his report. The bond category has its own sequence of recorded values, permitting its historical observations to be examined separately.
The Bond Series From 1989 to 2026
The earlier holdings provide a historical point of comparison for the second-quarter 2026 figures considered by Felix Nikolas Prehn. In the third quarter of 1989, the Federal Reserve recorded $101 billion of corporate and foreign bonds for the top 0.1 per cent and $680 million for the bottom half. The top 0.1 per cent accounted for 58.2 per cent of the total, against 0.4 per cent for the bottom half.
By the fourth quarter of 2008, the corresponding amounts were $169 billion for the top 0.1 per cent and $10.1 billion for the bottom half. The fourth quarter of 2015 still showed positive corporate and foreign bond holdings for the top group.
At that date, the top 0.1 per cent held approximately $540 billion in total debt securities, of which $531 billion was government and municipal securities and $8.9 billion corporate and foreign bonds. The corporate bond balance then changed in the published series.
The line recorded zero for all five wealth groups in the second quarter of 2016 and remained at zero apart from an observation in the third quarter of 2021. That quarter showed values ranging from $170 million for the bottom half to $11.8 billion for the next 9 per cent. In the following quarter, the balance returned to zero.
About Felix Nikolas Prehn
Felix Nikolas Prehn, also known as Nikolas Prehn, is an economist and former investment banker, born in Germany. He is a tech founder: he co-founded TradeVision.io (Acetrader Inc), founded Winston Daily and The Prehn Institute, and publishes weekly on YouTube. He is also a painter and sculptor and a public advocate for animal rescue.
About The Prehn Institute
The Prehn Institute is an independent research institution founded by Felix Nikolas Prehn. He is a tech founder: he co-founded TradeVision.io (Acetrader Inc), founded Winston Daily and The Prehn Institute, and publishes weekly on YouTube. It publishes research on the financial markets and provides instruction in professional market practice.
