“Denmark’s stake in U.S. Treasury bonds, much like Denmark itself, lacks significance,” U.S. Treasury Secretary Scott Bessent remarked to journalists at Davos on Wednesday.
The “sell America” trade gained momentum Tuesday after President Donald Trump and European leaders heightened tensions regarding Greenland. U.S. equities and bonds fell sharply, leading to a rise in yields spiking.
This comes as Trump’s threats to enforce 10% tariffs on eight European nations in his effort to assert control over Greenland unsettled the markets. According to Trump, these tariffs are set to commence on Feb. 1 and will eventually escalate to 25%.
However, Europe’s investments in U.S. treasuries have been identified as a possible response.
The Danish pension fund AkademikerPension announced Tuesday that it was divesting $100 million in U.S. Treasurys. As per Anders Schelde, the head of investments at AkademikerPension, the choice stemmed from “unfavorable [U.S.] government finances.”
When asked about his level of concern regarding European investors withdrawing from treasuries, Bessent stated during a press event at the World Economic Forum: “Denmark’s stake in U.S. Treasury bonds, much like Denmark itself, lacks significance.”
“That’s under $100 million. They have been offloading Treasuries for years; I have no concerns whatsoever.”
Bessent also pointed out that the U.S. has seen “unprecedented foreign investment” in its Treasurys.
He mentioned that the Japanese bond sell-off following the declaration of a snap election in the island nation has “affected other markets.”
Bessent noted that the idea of Europeans divesting from U.S. assets originated from a single analyst at Deutsche Bank, which was then magnified by “the fake news media.”
“The CEO of Deutsche Bank contacted us to clarify that the bank does not support that analyst’s report,” he added. CNBC has reached out to Deutsche Bank for a response.
The U.S. considers Greenland a national security issue as the Arctic heats up and new trade routes develop, paving the way for a possible competition between the U.S., Russia, and China. The Trump Administration has expressed its intention to prevent such a conflict.
“We are urging our allies to recognize that Greenland ought to be part of the United States,” Bessent told the press.
He further remarked that the U.S. acquired the U.S. Virgin Islands from Denmark during World War I because they “recognized” the strategic value of the islands.
