The world’s biggest bond market is quietly reverting to an old habit. Traders handling large positions in the $30 trillion US Treasury market are increasingly turning away from electronic platforms and back toward voice calls and direct messaging, a shift driven by the rise of highly leveraged hedge fund strategies and the need to execute sensitive trades discreetly.

Activity that surged onto automated systems over the past decade is now migrating back into private channels. The move is tied to the growing footprint of fast-moving hedge funds, whose basis-trade strategies rely on rapid execution, lower visibility, and the ability to negotiate spreads outside public order books.

At large Wall Street banks, senior traders say the shift is visible in their daily workflow. Deal flow that previously happened in milliseconds through electronic systems is being supplemented by one-to-one negotiations, with some trades executed entirely by phone. The trend has grown more pronounced as hedge funds take on more Treasury exposure through leveraged derivatives and repo financing, magnifying both trading volumes and market sensitivity around order disclosure.

Behind this resurgence is a simple concern, according to analysts: transparency cuts both ways. Electronic platforms increase price discovery, but they also broadcast large trading interests to the market. For funds operating with heavy leverage or seeking to unwind positions quietly, that visibility can move prices against them. Voice negotiations, by contrast, offer a controlled environment where size, timing, and pricing can be managed more strategically.

Regulators are watching the shift closely. The return of opaque execution channels coincides with renewed scrutiny of hedge fund leverage following the 2020 Treasury market turmoil. US officials and market supervisors have pushed for more oversight, arguing that sprawling private trades can obscure systemic risks.

For banks, the shift has been commercially welcome. Voice trading often commands higher fees, and relationship-driven execution gives dealers more leverage in pricing. But it also increases operational complexity, particularly as firms must document conversations and ensure compliance in an environment regulators have increasingly focused on.

Hedge funds argue the trend reflects market evolution rather than a retreat from transparency. They contend that hybrid execution models offer flexibility in a market where liquidity can fragment quickly, especially during periods of macro volatility.

What this signals is a subtle rebalancing of a market long assumed to be moving inexorably toward automation. Even in the most sophisticated corners of global finance, traders are rediscovering the utility of a phone call when billions are on the line and every basis point counts.

As the Treasury market grows more complex, the balance between electronic efficiency and private execution is likely to shape how risk is moved for years to come.