Leveraged hedge fund positions in US Treasureries are heightening risks of abrupt
unwinds that could stress global bond markets, Apollo Chief Economist Torsten
Slok said. Funds now hold about 8% of the $31 trillion market, up from 3% five
years ago, with repo and prime brokerage financing exceeding $6 trillion. Slok
warned forced deleveraging could send shockwaves through fixed income. The
align with Henry Paulson’s concerns for contingency planning against a
potential demand shock in US debt. Regulators have flagged risks in leveraged
basis trades, which worsened market turmoil during the pandemic and required
Federal Reserve intervention.
