The Fed reveals that Cayman Islands hedge funds hold more than $1.4 trillion in US Treasuries, exceeding official figures.

The Fed revealed that Cayman Islands hedge funds held more than $1.4 trillion in U.S. Treasuries, exceeding official figures, with total holdings reaching $1.85 trillion by the end of 2567.

October 17, 2568 at 09.52:XNUMX p.m. Bloomberg News reported that Research by the Federal Reserve found that hedge funds in the Cayman Islands hold more US Treasuries than official US data indicates, with holdings valued at about $1.4 trillion higher than reported.

The Fed's research team, led byDaniel Barth andDaniel Beltran A memo dated October 15th stated that the bond holdings of hedge funds in the Cayman Islands have increased by more than $1 trillion since 2565 and reached $1.85 trillion by the end of December 2567, while a US Treasury Department report showed these funds held only $423,000 billion.

Fed researchers say the figures reflect that “Cayman Islands” It is the world's largest holder of US Treasury bonds, surpassing China, Japan and the UK.

The discrepancy in the data is likely due to the fact that the official data does not include certain types of transactions related to basis trading, a speculative strategy by hedge funds that short government bond futures and buy actual bonds to profit from the price difference. The researchers explain that hedge funds often use repurchase agreements (repo) to finance their bond purchases, and use the purchased bonds as collateral for the loan.

The Fed added that tracking down the true owners of these bonds is difficult because the bonds are used as collateral and transferred through multiple layers, making it appear in the accounting systems of custodians that the bonds have been sold, when in fact ownership rights may still be with the original hedge fund.

refer : bloomberg.com

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