The Kobeissi Letter (@KobeissiLetter) “BREAKING: Hedge fund repo borrowing is now up to a record $3.4 trillion. Repo bo” — TopicDigg

BREAKING: Hedge fund repo borrowing is now up to a record $3.4 trillion. Repo borrowing is a form of short-term financing where hedge funds pledge Treasuries as collateral to borrow cash, allowing them to make levered bets. Repo borrowing has more than TRIPLED since 2019. Furthermore, prime brokerage borrowing is up to $3.2 trillion, doubling since 2022. Prime brokerage borrowing works similarly, but involves direct lending from large banks, providing hedge funds with additional capital to increase their market exposure. Meanwhile, hedge funds now own a record ~8% of the $31 trillion US Treasury market, up from just 3% in 2021, according to Apollo. A sudden rise in borrowing costs or volatility could force hedge funds to unwind these positions rapidly, causing heavy Treasury selling and risking broader bond market stress, similar to 2020. Hedge funds are now a key force in the US Treasury market.