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On October 15, the Federal Reserve released “The Cross-Border Trail of the Treasury Basis Trade.” It revealed a $1.4 trillion gap between two official measures of who owns US Treasury debt.
The Fed is actively investigating the discrepancy between Treasury International Capital (TIC) data, which tracks capital flows in and out of the US, and Form PF, data reported by SEC-registered investment advisers, regarding Cayman Islands holdings of US Treasuries.
TIC data show Cayman Islands entities hold only a small share of US Treasuries. But Form PF filings reveal Cayman-domiciled hedge funds held about $1.85 trillion at the end of 2024, $1.4 trillion more than TIC reports.
Between 2022 and 2024, these offshore funds purchased roughly 37…
