The Globe and Mail reports in its Thursday edition that researchers at the Federal Reserve have issued warnings in recent weeks about possible disruptions in U.S. Treasuries because of the return of a popular hedge-fund trading strategy that exacerbated a crash in the world's biggest bond market in 2020. A Reuters dispatch to The Globe reports that hedge funds' short positions in some Treasuries futures have recently hit record highs as part of so-called basis trades, which take advantage of the premium of futures contracts over the price of the underlying bonds, analysts have said. The trades consist of selling a futures contract, buying Treasuries deliverable into that contract with repurchase agreement funding, and delivering them at contract expiry. In two separate notes in recent weeks, economists at the Fed have highlighted potential financial vulnerability risks related to these trades, which are taking place at a time of volatility in the U.S. government bond market because of higher interest rates and uncertainty over future monetary-policy actions. "Cash-futures basis positions could again be exposed to stress during broader market corrections," Fed economists said in an Aug. 30 note.