HEDGE funds are crowding into US Treasuries, and that has bond traders bracing for more turbulence.
While the Federal Reserve doesn't break out hedge-fund ownership, a group seen as a proxy increased its holdings to a record US$1.27 trillion in the past year, according to a quarterly report released by the central bank this month. That came as foreign central banks and finance ministries, the biggest buy-and-hold owners in recent years, culled their investments for the first time on an annual basis since 2000.
The surge of hedge funds into US government debt is a worrying sign to Societe Generale SA and Commerzbank AG.
They say the firms, which often use borrowed money and jump in and out...