The official line on Wall Street is that an abundance of caution among clients in the face of uncertainty, especially around the direction of interest rates, has depressed trading volumes, volatility and revenues. A similar tale appears to be unfolding at banks themselves.

In the first quarter, the collective holdings of Treasurys by US banks grew by 23%-the biggest shift since the financial crisis and the fifth biggest on record, according to the quarterly banking report released by the Federal Deposit Insurance Corp. Wednesday. As a result, banks now hold more Treasurys than they have since 1997, even after adjusting for inflation.