News Digest: Hedge funds shakeup Euro Zone’s government bond market

March 21, 2024

News Digest:

Hedge funds are buying up large swathes of government debt sales as the Euro Zone’s $10 trillion government bond market presents opportunities amidst a rise in fund needs following retreats by all major European Central Banks, says a news report.

These high-volume purchases are providing much-needed capital to the region, but investors continue to load their bets with bank debt that ties their fortunes to lenders amidst growing global regulatory concerns around its market impact. The report is based on a series of interactions with traders and treasury officials who confirm that hedge funds are now entrenched in the European debt market.


These funds accounted for a record 55# of the European government bond trading volume, according to Tradeweb. This figure stood at 36% in 2020 and the robust growth has resulted in hedge funds displacing other financial institutions to become dominant for the first time. Market analysts had estimated in January that the Eurozone debt markets need to absorb a record $735 billion in additional bonds during 2024 as the ECB winds down its bond holdings.

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