Hedge Funds Engage in US Bonds

Hedge fund holdings of U.S. Treasury bonds rose to one trillion dollars by the end of 2025, nearly tripling their level from five years earlier, with the funds' share of tradable debt reaching about 7%, a record high. During the first half of 2026, funds continued to buy bonds on a net basis, with a noticeable increase in yields on 10- and 30-year U.S. Treasuries, exposing the market to greater risks than before. Many funds rely on strategies based on price differentials and leverage, which amplifies systemic risk, especially amid current market disparities. Nevertheless, funds play an important role in providing liquidity and supporting market efficiency, though sudden moves could trigger financial disruptions.