Hedge funds now present a more substantial risk to the US Treasury market than Chinese ownership. For a significant period, China was identified as the leading threat to the stability of US debt as its official holdings climbed to a peak of $1.3 trillion in 2013.
This record level of investment represented 14% of the total Treasury market at the time. Recent shifts in market composition indicate that the potential impact of hedge fund activity has overtaken the risks associated with China's historical position in the sovereign bond space.