Hedge Funds Now Dominate the Treasury Market. They Failed Their First Test.

Federal Reserve Chairman Jerome Powell is concerned about the stability of the Treasury market. He isn’t alone. 

In a press conference after the central bank’s April meeting, Powell discussed an issue that has weighed heavily on many regulators’ minds for the past year: the blowup in Treasuries that sent yields swinging wildly in March 2020. Investors should, in theory, rush into risk-free assets in a crisis. But global investors and companies offloaded Treasuries in exchange for cash in the early days of the pandemic, causing…