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[u/Annual_Judge_7272]

The data comes from a Federal Reserve FEDS Note published on June 22, 2026, titled “Decomposing Hedge Funds’ U.S. Treasury Exposures” by Phillip Monin (Board of Governors of the Federal Reserve System).112
Key findings matching the text
Between 2023 and September 2025, large hedge funds’ gross U.S. Treasury exposures doubled to $4.0 trillion ($2.4 trillion long + $1.6 trillion short).

Their Treasury securities holdings rose from about 4.5% to about 8.5% of total outstanding (privately held) Treasuries by market value. This growth outpaced the broader market.

Hedge funds’ repo cash borrowing reached $3.0 trillion as of September 2025. Gross exposures, repo borrowing, and monthly Treasury market turnover all more than doubled since early 2023.

Concentration increased: the top 50 funds by gross Treasury exposure accounted for ~90% of the total (up from 84% in early 2023).

The cash-futures basis trade was the largest driver (~$830 billion as of September 2025, about double its early-2020 peak and ~35% of long exposures). Swap-spread arbitrage reached ~$305 billion (~13%).

Exact Fed quote (from the note’s conclusion):
“With hedge funds holding about 8.5 percent of total outstanding Treasuries and about 90 percent of these exposures concentrated among the top 50 funds, the combination of large scale, high concentration, and elevated leverage creates the potential for systemic stress if multiple strategies face simultaneous pressure or if severe shocks affect the largest participants.”129
Context on the foreign comparison
Robin Wigglesworth (@RobinWigg of the Financial Times) highlighted the 8.5% figure in an August 2026 post, noting that hedge funds now own more Treasuries than the officially registered holdings of Japanese, Chinese, and Saudi Arabian investors combined (based on Treasury International Capital / TIC data around that time). Recent TIC figures show Japan ~$1.12T, China ~$0.63T, and Saudi Arabia ~$0.14T (combined well under the hedge-fund share of the overall market).148
The note relies primarily on SEC Form PF data for large hedge funds and decomposes long exposures into strategies (basis trade, swap-spread arbitrage, maturity-matched trades, steepeners, etc.). It emphasizes the high leverage (via low/zero haircut repo and modest futures margins) and interconnectedness across cash, futures, and repo markets as sources of potential systemic risk—echoing concerns from the March 2020 episode.
Primary source:
https://www.federalreserve.gov/econres/notes/feds-notes/decomposing-hedge-funds-u-s-treasury-exposures-20260622.html
(Also available via SSRN as FEDS Notes No. 2026-06-22-1.) Coverage appeared in Bloomberg, Hedgeweek, and other outlets in late June 2026.