Hedge funds now hold a record share of the $30 trillion Treasury market. What could go wrong?

Traders work on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., Sept. 25, 2026. Brendan McDermid | ReutersHedge funds are becoming a force to be reckoned with in the roughly $30 trillion U.S. Treasury market, stepping in at a time when some traditional long-term investors have been looking at other options. The shift is helping the government find buyers as its pile of debt grows, but it may also be making the world's largest bond market more vulnerable, experts told CNBC.Hedge funds' cash Treasury holdings reached $2 trillion at the end of 2025, nearly three times their level five years earlier, the U.S. Treasurys Office of Financial Research said last month. Marketable Treasury debt — which is traded in the secondary market — was $28.9 trillion, putting hedge funds' share at a record 7%.More recent Federal Reserve data shows hedge funds remained net buyers of Treasurys in the first half of 2026. Domestic hedge funds bought a net $60.6 billion in the second quarter, up from $26.4 billion in the first, bringing first-half purchases to about $87 billion. The interest from hedge funds comes at a particularly sensitive time for the Treasury market, with the 10-...