Hedge Funds' Aggressive Bet on Treasuries Puts Global Market at Risk

The Treasury market is in turmoil due to a lack of interest from foreign investors and pension funds. This has led to a surge in the 10-year Treasury yield, which reached 5.33 percent overnight, its highest level since 2002.

According to Gold Newsletter publisher Brien Lundin, 'this is a bond bloodbath.' Central bank gold buying is on the rise as investors seek tangible assets to protect against the decline of fiat currencies caused by monetary debasement.

Hedge funds, however, remain a key buyer of Treasuries. Their cash Treasury holdings reached $2 trillion at the end of 2025, nearly three times higher than just five years earlier.

The problem with hedge funds is their use of leverage. They borrow money to make investments, which can magnify systemic risks and lead to broader liquidity and financial stability events if forced deleveraging occurs.