Hedge funds are the new ‘shadow banks’—and some are worried they pose a systemic threat to financial stability

Quick Summary:

The $800 billion basis trade’ underlines how risky bets help keep the financial system humming.

Over the past two years, America’s 10 largest hedge funds have more than doubled their repo borrowing to $1.43 trillion, according to the Office of Financial Research.

By profiting off the arbitrage, these firms address a fundamental imbalance in credit markets created because mutual funds, pension funds, insurance companies, and other asset managers have high demand for Treasury futures.

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Article Details

Author / Journalist: Greg McKenna

Category: EconomyBusiness

Markets: United States

Topics: Tariffs and trade Hedge Funds Donald Trump Banks Markets Recession Federal Reserve

Source Website Secure: Yes (HTTPS)

News Sentiment: Neutral

Fact Checked: Legitimate

Article Type: News Report

Published On: 2025-04-20 @ 11:05:00 (3 days ago)

News Timezone: GMT +8:00

News Source URL: fortune.com

Language: English

Article Length: 1379 words

Reading Time: 8 minutes read

Sentences: 4 lines

Sentence Length: 345 words per sentence (average)

Platforms: Desktop Web, Mobile Web, iOS App, Android App

Copyright Owner: © Fortune

News ID: 28163716

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Official Website: fortune.com

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