The Globe and Mail reports in its Wednesday edition that a few hedge funds are significantly impacting the Government of Canada bond market. The Globe's Mark Rendell reports that a new Bank of Canada report highlights hedge funds' increasing presence and concentrated involvement in Canada's bond market. A significant portion of GoC bond trading is dominated by a few hedge funds, with nearly 70 per cent of activity from just five of them, according to BOC researchers. Hedge funds positively impact bond markets by increasing demand, allowing Ottawa to borrow more without high interest rates. Their trading activity also enhances market liquidity, facilitating transactions for other investors. Hedge funds differ from other bond owners by borrowing heavily in short-term repo markets and are more prone to sell during market disruptions, potentially triggering cascading effects. "The high concentrations suggest that if just one or two firms were to rapidly unwind their positions it could lead to a substantial and sudden spike in bond sales that could be a challenge for the market to absorb," wrote Andreas Uthemann and Adrian Walton, the principal researcher and assistant director of the BOC's financial markets department.