Treasury Turmoil: Hedge Funds and Financial Instability

This chapter explores the shifting dynamics of U.S. Treasury financing, focusing on the growing reliance on hedge funds over traditional investors and the resulting volatility in the market. It discusses the implications of fluctuating foreign holdings, especially in light of short-term debt issuance and how these changes could lead to financial instability. The chapter also highlights the interconnectedness of treasury market volatility and equity markets, while considering alternative assets like gold and Bitcoin in a changing economic landscape.