The FT writes: "After a year of painful investor redemptions, sharply reduced leverage available from banks and economic uncertainty, hedge funds now exert a far smaller pressure on prices than they once did. They currently account for just 12 per cent of average volume in the $33,500bn US fixed income market, compared with nearly a third in 2007, according to research by US consultancy Greenwich Associates. <>Whereas leverage of about five times was not uncommon for the average fixed income strategy in 2007, hedge funds are now investing with a maximum of two times leverage, or more often, none at all, according to prime brokers."

Greenwich Associates says: The results of Greenwich Associates' 2009 U.S. Fixed-Income Investors study reveal that hedge funds have acted more forcefully than other types of institutions to manage counterparty risk and otherwise adjust their trading practices in response to the credit market crisis. Hedge funds are more likely than other types of institutions to say they have cutback on the total number of dealers they use for fixed-income trading, shifted trading volume to dealers with the least counterparty risk and reduced the concentration of their trading business held by any single dealer [Source.]

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