U.S. Treasury · CryptoSlate
Hedge funds built a $1.2 trillion Treasury trade on money they have to keep borrowing
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Companies can own a mountain of US government debt without betting that bond prices will rise.
Key facts
- But if borrowing costs on the other $95 million increase by 0.2% for the year, the extra bill is $190,000
- If it lends $98 against $100 of bonds, the fund supplies the other $2, a 2% haircut
- Federal Reserve researchers estimated $830 billion of basis positions for September 2025, in research published this June
- Bitcoin is +0.27% over the past 24 hours and currently sits at rank # 1 by market cap
Summary
01 Hedge funds use borrowed money to exploit small pricing gaps between Treasury bonds and futures. 02 Leverage turns tiny spreads into meaningful returns while making the trade dependent on cheap repo financing. 03 A position decline alone cannot show whether funds are exiting calmly or being forced to sell. The government gets another buyer, whose interest lasts as long as the trade pays.