Over two centuries ago, Alexander Hamilton argued that a permanent Treasury market would be a national blessing, shaping the nation’s politics, dryers, wars and today its dryers. The Treasury market now stands at about $32tn, exceeding 120% of GDP and the post‑WWII peak.

Jay Powell warned that while the debt level is not unsustainable, the path is not sustainable, a caution echoed as the US Treasury market grows to the largest debt sight in history.

Hedge funds now own about 8.5% of the market, double their exposure between 2023 and 2025, and hold Treasury bonds exceeding the combined holdings of Japan, China and Saudi Arabia. Their short‑term leverage turns a once‑stable market into a fragile one.

During the March 2020 crisis, a global “dash for cash” forced massive Treasury sales, disrupting the basis trade strategy and prompting the Fed to purchase nearly $9tn of Treasuries to stabilize liquidity.