The Federal Reserve is concerned about potential disruptions in U.S. Treasuries due to the revival of hedge fund trading style that intensified the 2020 bond market catastrophe.

Hedge funds’ short positions in some Treasuries futures have reached record highs due to basis trades, which take advantage of market premiums over bond prices.

Two Fed economists have noted financial vulnerability risks related to these trades, which are occurring at a time of volatility in the U.S. government bond market due to higher interest rates and uncertainty over future monetary policy.