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Hedge funds' record stake in Treasury market raises alarm
Original: Hedge funds now hold a record share of the $30 trillion Treasury market. What could go wrong?
Hedge funds now hold a record share of the $30 trillion US Treasury market, prompting concerns among analysts about the risks this concentration poses. Much of the position is tied to the basis trade, a leveraged strategy betting on small price gaps between Treasury securities and futures. Commentators warn that if conditions shift, rapid unwinding of these positions could amplify volatility in the world's most important bond market.
Why now: Record hedge fund exposure to Treasuries is fuelling debate about potential market instability and liquidity risks.
Evidence
- Hedge funds now hold a record share of the $30 trillion Treasury market. What could go wrong? · CNBC
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