A little-known hedge fund is buying a lot of Treasury bonds and it is freaking people out

A little-known New York hedge fund has been dominating U.S. Treasury debt auctions, and now the Treasury Department is sitting up and taking note.

Carolyn Cui and Gregory Zuckerman at The Wall Street Journal report that Elements Capital Management LLC has been the largest bidder in many of the Treasury note and bond auctions from November to July.

The fund is led by trader Jeffrey Talpins, a former Citigroup and Goldman Sachs trader who is described as reserved and intense.

The fund uses what is called a "bond-auction strategy", according to the report, in an effort to pocket small short-term differences in prices that result from the auction process.

The Treasury Department, which prefers long-term holders of Treasury bonds, has asked Elements about the purchases, the Journal reported.

Read the full The Wall Street Journal Article here.

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