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Hedge Fund Invasion of U.S. Treasuries Puts Bond Traders at Risk

  • Jump in volatility adds to worries in $13.3 trillion market
  • Foreigners culled Treasuries for first time since 2000
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Hedge Funds Crowd Into Treasuries

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Hedge funds are crowding into U.S. Treasuries, and that has bond traders bracing for more turbulence.

While the Federal Reserve doesn’t break out hedge-fund ownership, a group seen as a proxy increased its holdings to a record $1.27 trillion in the past year, according to a quarterly report released by the central bank this month. That came as foreign central banks and finance ministries, the biggest buy-and-hold owners in recent years, culled their investments for the first time on an annual basis since 2000.