Hedge-Funds halten so viele US-Staatsanleihen wie noch nie: Bei einem Crash wirken sie als Brandbeschleuniger

Hedge-funds dominate the US bond market like never before, potentially acting as accelerators in the event of a market crash. Interest rates for US government debt have reached their highest level in nearly two decades, driven by increased concerns about rising government debt and higher inflation due to soaring energy prices. The U.S. government is set to run a massive budget deficit of 6.5% of GDP this year, while President Donald Trump shows no signs of slowing debt growth.

U.S. government debt has surpassed the $40 trillion mark, with the country now spending over $1 trillion annually on interest payments.

As interest rates climb, the debt servicing burden becomes more expensive, creating a vicious cycle. According to the Committee for a Responsible Federal Budget, interest expenses could rise to $2.7 trillion by the end of the decade, surpassing the combined spending on Medicare and other social programs. The bond markets are not only witnessing a rise in interest rates; hedge-funds are increasingly influencing the market.

Data from the Office of Financial Research shows that these speculative funds now hold over $2 trillion worth of U.S. government bonds—a threefold increase in just five years. Short-term oriented hedge-funds are gradually replacing long-term investors, such as pension funds.

The Federal Reserve is closely monitoring this development, expressing concern about the high leverage of these hedge-funds, which use borrowed funds to amplify their positions. In their latest "Financial Stability Report," they warn that if these funds lose access to financing, their high debt levels could infect other parts of the economy.

The balance of power in bond markets has shifted to hedge-funds, raising concerns about potential financial instability. One popular strategy among hedge-funds is the "basis trade," involving the purchase of actual government bonds in the cash market and simultaneous selling of futures contracts on the same bonds in the futures market.

This strategy relies on the futures being valued higher, allowing funds to multiply their capital 30 to even 100 times.

However, this strategy falters once liquidity vanishes from the bond market, as seen in March 2020 during the outbreak of the Covid-19 pandemic, when highly leveraged funds were forced to liquidate their positions, triggering further forced sales. The concentration of buying power among the 50 largest hedge-funds, which together own 90% of government bonds, exacerbates the risk.

While the U.S. government may currently benefit from hedge-funds' purchases, foreign investors have been retreating from U.S. Treasuries due to growing mistrust in the country's reliability as a debtor. Foreign central banks, which held 40% of U.S. government bonds in 2008, now own only 12%, with China reducing its reserves to $600 billion and Japan retaining $1.1 trillion.