Since the start of the Iran war, corporate treasury teams have been moving their excess cash into longer-dated securities. That's the headline result of a recent study by Clearwater Analytics, a firm that provides trade execution, portfolio management, and accounting solutions for institutional investors.
Clearwater regularly analyzes trends across its clients' more than $1 trillion in assets. A recent study of anonymized and aggregated records across its portfolio of around 500 companies found that organizations began reducing their cash holdings when the conflict in Iran started. (Clearwater defines "cash" as not just hard currency in bank accounts, but also Treasuries, money-market funds, commercial paper, and any other assets that mature in less than 90 days.)
Treasury & Risk sat down with Matthew Vegari, Clearwater's head of research, to learn more about what the firm is seeing.
Treasury & Risk: Before we get into the results of your most recent research, what does your customer data typically tell you about corporate investment behavior?
Matthew Vegari: It's completely normal for our clients to dial up or dial back their cash allocations using fixed income. We saw corporate cash holdings peak in 2023, and we've been on a slow decline since the Fed started cutting interest rates. But we noticed a really rapid decline that was pretty widespread starting in early March, right after the U.S. and Israeli campaign against Iran began. It wasn't just a few corporates, and we don't discern spikes in our system too often.
Last year, we did see a notable spike in activity around Liberation Day [when the initial round of President Trump's U.S. tariffs took effect]. Then, this year, there's been a flurry of activity. It started in the aftermath of the launch of the military campaign, and it is ongoing. We're now at the lowest average cash allocation in our system since at least 2018.
T&R: So, where are your clients putting their excess cash?
MV: They're going farther out on the curve—six months to two years. Our clients are consistently choosing slightly longer-dated fixed income, anything over six months. It's interesting because in prior years, we haven't seen many upticks in duration that aren't caused by either the pandemic or remarkable moves by the Fed.
We also produce the Clearwater Duration Activity Index, which evaluates how individual companies' investment duration is increasing or decreasing relative to that firm's history, then aggregates that data into an index. And we are currently in the index's sharpest increase in duration since 2022.
In 2025 and early 2026, the index hovered around zero; companies weren't changing much in their allocation strategies. There was a plummet in duration during Covid when companies started hoarding cash, and then they started buying Treasuries again and going farther out on the curve once the Fed cut rates to zero. And now the Duration Activity Index has really surged over the past couple of months.
T&R: I assume economists' expectations that higher interest rates will endure for longer is also encouraging treasurers to move to longer-dated securities.
MV: Yes, today's trend has a lot to do with inflation. We got a pretty hot print last week, and the Fed is generally expected to have greater difficulty ignoring this inflation because we've seen shock after shock after shock in the post-pandemic recovery cycle. We had the post-Covid inflation with supply-chain bottlenecks that everyone will remember. Then we had a spike in energy prices after Russia invaded Ukraine. Then last year we had the tariffs, which also led to higher prices, and now we have another energy shock.
There's an argument that the Fed did look through tariff inflation, because it was cutting interest rates even as inflation was ticking back up. Fed officials seemed to reason that imposing 10 percent tariffs would lead to a one-off increase in prices, not 10 percent annual inflation going forward. But there's a certain point where the Fed has to really consider how much it can look through, even in the face of potential weakness in the labor market, because it already looked through rising prices last year.
The policy rate is either at neutral or almost at neutral, depending on whom you ask, and I think markets are saying that the Fed can't really cut interest rates because it hasn't hit its 2 percent inflation target. So, if you're a corporate, when markets are pricing no rate cuts—or even pricing in a slight hike in interest rates—why not buy farther out on the curve? Treasurers previously were holding out in hopes that rates were going to drop, and now they might as well lock in higher yield when they can.
T&R: Do you see this attitude within just a subset of your clients, or across your entire client base?
MV: I would view this as a majority opinion for corporate treasurers. The swift movement away from cash that we're seeing is broad-based, which indicates that the desire to lock in yields is trumping the need for near-term liquidity. And that might also be a good reflection of corporate balance sheets today. If you can go farther out on the curve and lock in greater yield, that means you don't expect to need cash immediately.
T&R: Is that also a comment on companies not expecting to be making significant capex investments or engaging in M&A [mergers and acquisitions] over the next six months to year?
MV: I wouldn't necessarily say that. I would view it more as an indicator that balance sheets are reasonably healthy.
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