"The dollar has continued to sink, and top investors in Northern Europe are reportedly re-evaluating their exposure to U.S. assets, while Danish pension funds have already dumped Treasury bonds. Part of that is because of concerns over U.S. debt, but Trump's Greenland crisis and his continued unpredictability have also fueled calls for Europe to weaponize its capital. In fact, European investors own $8 trillion in U.S. stocks and bonds, with $3.6 trillion of that in Treasury debt alone."
"Europe accounts for about a third of U.S. government bonds held overseas, or roughly 10% of the overall Treasury market, after nearly doubling its holdings since 2019, according to a note Wednesday from Capital Economics. But it's precisely this massive stockpile that makes it unlikely Europeans will suddenly sell Treasuries, because moving around that much money would roil financial markets. Shifting into alternative investments would send those prices soaring and reduce their expected returns, the note said."
European investors hold roughly $8 trillion in U.S. stocks and bonds, including about $3.6 trillion in Treasury debt, equivalent to about a third of U.S. government bonds held overseas. Market turmoil and political strains, including actions tied to Greenland and concerns over U.S. debt, have prompted reevaluation of exposure and some sales by Danish pensions. The scale of Europe’s holdings makes abrupt dumping unlikely because reallocating that volume would roil markets, lift prices of alternatives and cut expected returns. European banks’ reliance on dollar funding and reciprocal holdings by U.S. investors reinforce U.S. "escalation dominance."
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