Bank of England Deputy Governor warns hedge fund expansion increases bond market shock risk
- 1Bank of England Deputy Governor Sarah Breeden told CNBC that the increased proportion of hedge funds has raised the possibility of bond market shocks
- 2Hedge funds are price-sensitive international investors using leverage, which increases the likelihood of a shock in one market spreading to another
- 3The IMF warned that total hedge fund assets are approximately $13 trillion and that leverage and concentrated trading could increase market stress
So what's the key point?
The major players in the bond market are shifting from entities like pension funds to hedge funds that invest using borrowed money. This change means a shock in one market is more likely to spread to other markets.
Source CNBC · View original ↗
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