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Treasury market stress: the 2020 'dash for cash' and 2025 selloff
Mar 2020; Apr 2025· Crisis or event
Fact, law or dataA rule, statute, definition or measured number.
Two episodes when the world's safest, most liquid bond market malfunctioned: the March 2020 'dash for cash' and the April 2025 selloff.
See it on the Money & Finance map →How it works
In March 2020, as COVID hit, foreign central banks, bond funds and hedge funds all sold Treasuries for cash at once. Dealers' balance sheets filled, bid-ask spreads widened, and the 10-year yield jumped from about 0.5% to 1.2% in nine days while stocks fell. The Fed bought about $1 trillion of Treasuries in three weeks. In April 2025, after the April 2 tariffs, the 10-year yield rose about half a point in a week, the most since 2001, while the dollar also fell.
Why it matters
Treasuries should rise in a panic; when they fall with stocks, the base rate under every loan and cap rate wobbles. Reforms followed: a Fed standing repo facility (2021) and SEC central clearing (2026–27).
Facts, rules and data
The Inter-Agency Working Group's 2021 report on March 2020, Fed and Group of Thirty studies, Fed balance-sheet data, and daily Treasury yield records.
Debates and risks
Whether April 2025 reflected hedge-fund unwinds, foreign selling or doubts about US policy is debated; data on who actually sold remain incomplete.
Connections (3)
▸Treasury market stress: the 2020 'dash for cash' and 2025 selloff struck at the start of COVID-19 crash and rescue (2020)Fact, law or data
The connection
As the pandemic spread, everyone needed cash at once. Foreign central banks, bond funds facing redemptions and leveraged hedge funds sold Treasuries, and dealers could not absorb the flood. Yields rose even as stocks fell. The Fed restored order by buying about $1 trillion of Treasuries in three weeks and opening swap lines and repo facilities.
When and why
Roughly March 9–23, 2020, centered on New York dealers; the Fed announced a $500 billion Treasury purchase plan on March 15.
How we know
Fed and Treasury staff studies, the Inter-Agency Working Group's 2021 report, and data showing record bid-ask spreads and dealer inventories.
Debates and risks
Who sold the most, foreign official holders, mutual funds or hedge funds, is still debated among researchers using different data.
▸Treasury market stress: the 2020 'dash for cash' and 2025 selloff exposed the basis trades of Hedge fundsFact, law or data
The connection
In a basis trade, a hedge fund buys a Treasury, sells a matching futures contract that costs slightly more, and borrows in repo to pay for the bond, sometimes at 50 times leverage or more. The profit is tiny but steady. When volatility spikes, margin calls force funds to unwind, selling Treasuries into an already strained market.
When and why
March 2020 and April 2025; the trade was estimated at roughly $1 trillion or more by 2025, though estimates vary.
How we know
CFTC data on leveraged funds' futures shorts, Fed and BIS research, and Office of Financial Research data on hedge-fund repo borrowing.
Debates and risks
How much basis-trade unwinding drove each episode is disputed; in April 2025 some analysts blamed swap-spread trades or foreign selling instead.
▸Treasury market stress: the 2020 'dash for cash' and 2025 selloff flared again after April announcements in US tariff surge of 2025–26 and the IEEPA rulingFact, law or data
The connection
After the April 2 tariff announcement, stocks fell and Treasuries at first rallied, as usual. Then from April 7 they sold off: the 10-year yield rose about half a point in five days to near 4.5%, while the dollar also fell, a sign investors were cutting US exposure. On April 9 President Trump paused most reciprocal tariffs for 90 days.
When and why
April 7–11, 2025, worldwide; the 30-year yield briefly topped 5%, and the 10-year had its biggest weekly rise since 2001.
How we know
Daily Treasury yield data, auction results that week, and President Trump's own remarks that he had been watching the bond market.
Debates and risks
Whether foreign selling, hedge-fund unwinds, or doubts about US policy and the dollar's safe-haven role drove the move is still debated.