Over the weekend, Deutsche Bank’s head of FX George Saravelos laid out one theoretical reason why in his view, Europe has leverage over the US in the latest burst of transatlatnic tensions over Greenland: or rather $8 trillion reasons why the US has leverage.
As Saravelos wrote, “European countries own $8 trillion of US bonds and equities, almost twice as much as the rest of the world combined” and added that in an environment where the geoeconomic stability of the western alliance is being disrupted existentially, “it is not clear why Europeans would be as willing to play this part. Danish pension funds were one of the first to repatriate money and reduce their dollar exposure this time last year. With USD exposure still very elevated across Europe, developments over the last few days have potential to further encourage dollar rebalancing.“
Sure enough, just hours later, Europe appears to have taken the Deutsche Bank strategist’s advice and contrary to Scott Bessent’s appeals this morning that European governments aggressively selling American debt to counter Washington’s threats over Greenland, would “defy logic”, Bloomberg has reported that the Danish pension fund AkademikerPension is planning to exit US Treasuries by the end of the month, amid concerns that the policies of President Donald Trump have created credit risks too big to ignore.
“The US is basically not a good credit and long-term the US government finances are not sustainable,” Anders Schelde, chief investment officer at AkademikerPension, told Bloomberg on Tuesday, which is hilarious because this has been the case for years if not decades. Amusingly, it was another Dane, Hans Christian Andersen, who first pointed out that the Emperor is naked. Two hundred years later, Denmark has done it again.
AkademikerPension, which manages around $25 billion in savings for teachers and academics, held about $100 million in US Treasuries at the end of 2025, Schelde said. Risk and liquidity management is the only reason to remain in Treasuries, and “we decided that we can find alternative to that,” he said.
Schelde cited Trump’s threats to take over Greenland as part of the reason to sell US Treasuries. But concerns about fiscal discipline and a weaker dollar also justify a retreat from US exposure, he said.
And since Europe has a thing for virtue signaling first – like blowing up all their nuclear power plants without any valid replacement in store – and asking questions much later, expect many others to follow in Denmark’s shoes, only to find out months later that there is no market that is deep or liquid enough to absorb the funds without completely blowing up the bid/ask in the process.
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