Treasury Secretary Scott Bessent made striking comments regarding Denmark on Wednesday during a press conference at the World Economic Forum in Davos, Switzerland. His remarks came in response to the Danish pension fund, AkademikerPension, announcing its decision to divest nearly $100 million from US Treasury bonds, a move prompted by concerns over what they describe as poor government finances.
Bessent dismissed Denmark’s investment, calling it “irrelevant” in the grand scheme of the US Treasury market. He stated that the investment, which is less than $100 million, constitutes a minor fraction of the $30.8 trillion US Treasury market and emphasized that this divestment is not a new trend, as Denmark has been selling off Treasuries for years. He pointed out that Denmark’s total holdings of US bonds have declined significantly over time, dropping from nearly $18 billion in 2021 to just under $10 billion currently.
The broader context of these comments is the ongoing geopolitical tensions fueled by President Trump’s interest in acquiring Greenland. Trump has also intimated the possibility of imposing significant tariffs on nations opposing his plans, a strategy that has met criticism from various European allies. Bessent’s remarks highlight a disconnect between the current US administration’s stance and European sentiment towards such aggressive diplomatic tactics.
Adding to the complexities, a recent analysis from a Deutsche Bank analyst suggested that Trump’s actions could lead EU nations to sell off US debts, a possibility Bessent firmly rejected. He noted that this interpretation originated from a single analyst and was incorrectly amplified by media outlets. Furthermore, he relayed that Deutsche Bank’s leadership does not endorse that view.
Despite ongoing speculation about potential sell-offs of US Treasury holdings by major debt holders, which include nations like Japan and China, demand for US Treasuries has remained robust. This persistent demand enables the US government to finance its domestic policies and ongoing tax cuts, despite the rising national debt.
As global leaders convene in Davos, top European officials are seeking avenues to ease existing tensions and solidify alliances amidst these financial and territorial disputes. The dynamics surrounding US Treasuries and foreign investments continue to underscore the balancing act that the US faces in maintaining financial stability while navigating complex international relations.