Hedge funds held approximately $2 trillion in U.S. Treasury securities by the end of 2025, accounting for 7% of the market's outstanding debt, according to data from the Office of Financial Research. Research published by the Dallas Fed on October 16 indicates that hedge funds are shifting towards alternative trading strategies that support smaller Treasury positions while assuming the same amount of risk capital. This implies that the U.S. government may need other investors to purchase the bonds no longer desired by hedge funds, likely at higher yields.