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Lisa Abramowicz

Hedge Funds' Crush on Treasuries

Risk of short-term volatility doesn't portend long-term spike in yields.

Hedge funds are increasingly tying the fortunes of U.S. bonds to the rest of the world, which suggests that Treasury yields will stay low  -- or go even lower -- in the near term.

These investors probably increased their Treasury holdings to record amounts over the past year, according to Federal Reserve data cited by reporters Liz Capo McCormick and Alexandra Scaggs in a Bloomberg News article on Monday. This is significant because these funds generally trade securities more frequently than sovereign wealth funds or central banks, which may make the debt more volatile day to day.