$5.6 billion a day changes hands in zero-coupon Treasury STRIPS, yet the public aggregate volume data that fixed-income desks rely on reports none of it. Since March 2020, FINRA has published daily trading volumes for U.S. Treasury securities but has excluded the Separate Trading of Registered Interest and Principal of Securities—the very instruments that pension funds and insurers use to pin down long-duration cash flows. A new analysis by the New York Fed gives the first detailed look at this invisible market, and the numbers clarify just how much demand for the long end stays off the public tape.
STRIPS are created by detaching the twenty semi-annual coupon payments and the principal repayment of a standard Treasury note or bond, turning each cash flow into a standalone zero-coupon security. This unbundling lets liability-driven investors match precise future obligations. As of mid-2025, $560 billion of Treasury securities were held in stripped form—2.5% of the $22.2 trillion in marketable notes, bonds, and TIPS outstanding. Bonds make up 98.1% of that stripped stock. The activity is heavily concentrated at the long end, where a single bond, the 2053 maturity, was 36% stripped, while others in the 25–30 year sector were barely touched. Corporate treasurers and real estate investors who benchmark their cost of capital against the 10- and 30-year points of the curve should notice: the daily stripping and reconstitution flow itself averages $1,827 million and $1,567 million, respectively, further evidence that the long end is continuously repackaged to meet institutional demand.
The daily trading volume of $5.6 billion—$3,856 million in principal STRIPS and $1,784 million in coupon STRIPS—sits alongside the $739 billion in conventional Treasury notes, bonds, and TIPS that trade each day. But the composition tells the story. Principal STRIPS trade 88% dealer-to-client, with an average trade size of $7 million, reaching $12.3 million in the 25–30 year bucket. These are not retail lotteries; they are large, deliberate placements by end-users managing long-term liabilities. Coupon STRIPS, more evenly distributed across maturities, trade at an average size of $850,000, with only 73% dealer-to-client. The gap means that a significant share of trading in zero-coupon long-dated obligations occurs between dealers and large institutional end-users, and this activity is missing from the headline Treasury volume prints.
For a CRE investor or a corporate treasurer, the exclusion distorts the public signal of market depth at the long end. Cap rates and infrastructure discount rates anchor to the risk-free yield curve. If the visible Treasury volume understates the liquidity and consistent demand for duration, any assessment of the true liquidity premium embedded in long zero-coupon rates becomes guesswork. The NY Fed authors note that principal STRIPS tend to trade at higher prices—lower yields—than coupon STRIPS of the same maturity, and they suggest that liquidity differences could help explain that pricing gap. That is a testable hypothesis, but only someone who can see the full trade record can run the test. Today, the public cannot.
The next signpost is regulatory: FINRA has not indicated if STRIPS will be folded into the aggregate Treasury volume data. Until then, anyone who relies on the risk-free curve to price a 30-year office tower, a ground lease, or a pension buyout should track the Fed’s own STRIPS research and treat the public tape as incomplete. Watch for further work from the NY Fed linking STRIPS liquidity to the yield curve spreads that move cap rates.