Hedge fund borrowing raises fresh risks for the U.S. Treasury market

The U.S. Treasury market is facing growing financial stability risks as heavily borrowed hedge funds play a larger role in trading government debt. The market finances the national debt and underpins the broader financial system.

A Federal Reserve investigation found that large hedge funds’ gross Treasury exposures doubled from 2023 to September 2025, reaching $4 trillion. Their repo borrowing rose to $3 trillion, with 90% concentrated among the 50 largest funds.

The findings have renewed concerns about a repeat of the March 2020 turmoil, when the Treasury market briefly lost liquidity and the Federal Reserve intervened with several trillion dollars. Regulators have linked that crisis in part to the rapid unwinding of leveraged hedge-fund trades.

Read the full story at wsws.org.