Britain’s bond vigilantes target Trump’s America

Group 1 - UK holdings of US Treasuries have nearly doubled in the past five years, reaching $865 billion (£648 billion), surpassing China as the second-largest holder of US debt [1] - The shift in foreign ownership indicates a growing dominance of hedge funds over central banks as buyers of US Treasuries, with London emerging as the largest hedge-fund hub globally [2] - Hedge funds are characterized as more volatile investors compared to traditional holders, which could lead to increased market fluctuations in response to US fiscal policies [3][4] Group 2 - The demand from hedge funds makes US Treasuries more susceptible to significant price swings, especially if there are indications of increased government spending [4][5] - The risk of a crisis due to speculative trades by foreign hedge funds in the UK debt market has been highlighted, with potential regulatory measures being considered to limit hedge fund activities [6] - Foreign investments in US government debt have surged by $630 billion since April, despite the US administration's tax cuts and increased spending [7] Group 3 - Foreign ownership of US debt has increased by over 50% since 2015, surpassing the $9 trillion mark for the first time in March [9]