The holders of U.S. debt have shifted drastically over the past decade, tilting more toward profit-driven private investors and away from foreign governments that are less sensitive to prices.

That threatens to turn the U.S. financial system more fragile in times of market stress, according to Geng Ngarmboonanant, a managing director at JPMorgan and former deputy chief of staff to Treasury Secretary Janet Yellen.

Foreign governments accounted for more than 40% of Treasury holdings in the early 2010s, up from just over 10% in the mid-1990s, he wrote in a New York Times op-ed on Friday. This reliable bloc of investors allowed the U.S. to borrow vast sums at artificially low rates.

“Those easy times are over,” he warned. “Foreign governments now make up less than 15% of the overall Treasury market.”

While they didn’t dump Treasuries and still hold roughly the same amount as 15 years ago, foreign governments didn’t ratchet up their buying in line with the recent surge in U.S. debt, which now tops $38 trillion.

Private investors have stepped in to absorb the massive supply of Treasury bonds, but they are also more likely to demand higher returns, making rates more volatile, Ngarmboonanant pointed out.

The influence of hedge funds, which doubled their presence in the Treasury market in the last four years, raises particular concern among U.S. officials, he added. In fact, the biggest share of U.S. debt that’s held outside the country is now in the Cayman Islands, where many hedge funds are officially based.

Ngarmboonanant attributed “unusual turbulence” during recent shocks in the Treasury market, which has historically been a safe haven during crises, to hedge fund activity. That includes the sudden selloff in the immediate aftermath of President Donald Trump’s shocking “Liberation Day” tariffs.

Relying on AI-fueled productivity gains, stablecoins, Fed rate cuts or inflation to sustain U.S. debt will eventually backfire, he said.

“Financial engineering and false hopes won’t keep America’s lenders happy,” Ngarmboonanant predicted. “Only a credible plan to restrain deficits and control our debt will ultimately do that.”

The ability of bond investors to force lawmakers to change course has earned them the “bond vigilantes” moniker, which was coined by Wall Street veteran Ed Yardeni in the 1980s.

Indeed, upheaval in the bond market after Trump unveiled his global tariffs in April helped convince him to retreat from his most aggressive rates. That prompted economist Nouriel Roubini to say, “the most powerful people in the world are the bond vigilantes.”