Hedge Funds Buying Treasuries???

[pcoulter]

Can anyone tell me why hedge funds purchased the bulk of treasuries at the most recent auction? Are they trying to keep long rates down? It is also interesting to note that foreign central banks really decreased their purchases.

[pcoulter]

I'll post the exact numbers when I get home, but off the top of my head, it was mentioned in todays "Daily Pfennig" by Chuck Butler:


"Well... There's a ton of rumors, conspiracy theories, and what-not going around after yesterday's uncovering of the offshore Hedge Funds buying all the Treasuries in January... The one constant rumor that I hear is that the Fed created the offshore Hedge Fund and are buying their own Treasuries to keep Foreign Central Banks interested... WOW! Now that's out there! But you know me, Mr. Conspiracy, and I get a kick out of these things... But the way I see it, these offshore Hedge Funds may have already begun to unwind these positions, as we look at how the yields of Treasuries have gone up very quickly in the last month... Remember... That NFSP data was for January... That's two months ago,
those positions could be long gone, like an Albert Pujols dinger!"

[HenryTo]

pcoulter,

Where did you get that info from? Could you provide a link?

This is new to me although I definitely am not surprised given that the respect for risk has declined so much over the last couple of years. My guess is that funds are becoming risk-adverse once again and are moving from stuff like emerging market bonds and junk bonds into U.S. Treasuries. Hmmm... what do you think?

Henry