Hedge Funds Are Helping Finance the Government’s Borrowing

Hedge funds helped scoop up 40% of the Treasury issuance in the second quarter, Fed data released Friday shows.

Trading firms, comprising much of the category dubbed “households and nonprofit organizations,” increased their holdings to $2.3 trillion, nearly three times the level from a year earlier. Private equity firms and other investors are also included in that category. Only federal retirement plans and money-market funds had bigger appetites. Together, the three filled the gap for the Fed as it shrinks its holdings down from a fifth of all U.S. debt.