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‘It is impossible to completely shift allocation out of the United States,’ Ermotti said in an interview during the World Economic Forum in Davos, Switzerland, on Tuesday. ‘The U.S. is the strongest economy in the world.’<\/p>\nAs geopolitical tensions have led to a concurrent decline in the U.S. stock and bond markets, with calls to ‘sell America’ resurfacing, the CEO of UBS Group warned that dumping U.S. assets is a ‘rather dangerous’ gamble. While Denmark’s AkademikerPension has announced it will sell U.S. Treasuries, U.S. Treasury Secretary Bessent dismissed claims that Europe might retaliate by selling U.S. debt as a ‘false narrative.’ The President of Finland predicted that the Greenland crisis would ‘ease’ before the end of this weekend.<\/p>\n
UBS: Selling U.S. Assets Is a Dangerous Gamble; Completely Shifting Allocation Out of the U.S. Is Impossible<\/p>\n
Sergio Ermotti, CEO of UBS Group, stated that investors selling U.S. assets and the dollar are making a ‘rather dangerous bet.’<\/p>\n
‘It is impossible to completely shift allocation out of the United States,’ Ermotti said in an interview during the World Economic Forum in Davos, Switzerland, on Tuesday. ‘The U.S. is the strongest economy in the world.’<\/p>\n
Ermotti noted that through the continuous creation of wealth and innovation within the economy, the U.S. market remains a key focus for UBS.<\/p>\n
Multiple Danish Pension Funds Recently Sold U.S. Treasuries Amid Concerns Over Credit, Fiscal, and Federal Reserve Independence Risks<\/p>\n
Denmark’s AkademikerPension plans to sell its U.S. Treasuries by the end of this month due to concerns that policies by U.S. President Donald Trump have triggered credit risks that cannot be ignored.<\/p>\n
Anders Schelde, the fund’s Chief Investment Officer, told Bloomberg on Tuesday: ‘The U.S. essentially does not have a strong credit profile, and in the long term, the U.S. government’s fiscal position is unsustainable.’<\/p>\n
Schelde revealed that the fund, which manages approximately $25 billion in savings for teachers and academics, holds around $100 million worth of U.S. Treasuries until the end of 2025. He emphasized that risk and liquidity management are the only reasons it continues to hold U.S. bonds, adding, ‘We have decided that we can find alternative options.’<\/p>\n
Bessent Calls Greenland Dispute-Related Hysteria Baseless; Rejects Speculation of European U.S. Bond Sales as False Narrative <\/p>\n
Against the backdrop of an expanding transatlantic rift triggered by U.S. intentions to annex Greenland, U.S. Treasury Secretary Scott Bessent called for calm, urging allies to adhere to trade agreements and dismissing claims that Europe would retaliate strongly by dumping U.S. Treasuries.<\/p>\n
“I am confident that national leaders will not escalate the situation, and ultimately resolve it in a very favorable manner,” Bessent stated at a press conference during the World Economic Forum in Davos on Tuesday.<\/p>\n
When asked about reports of a potential European sell-off of U.S. Treasuries, Bessent dismissed such speculation as a “false narrative.”<\/p>\n
“It defies all logic, and I strongly oppose it,” he told reporters.<\/p>\n
The President of Finland anticipates that tensions over Greenland will likely “ease” before the end of this week.<\/p>\n
Alexander Stubb, the President of Finland, predicted that the crisis surrounding Greenland could “ease” before the end of this week.<\/p>\n
Stubb, speaking in Davos, said: “On this topic, I received the latest updates in the past two to three hours\u2014this is how fast situations evolve in today’s new diplomatic environment\u2014and it gives me some hope that we will find a solution.” He did not elaborate further.<\/p>\n
Barclays: Compared to the US dollar, the Greenland issue poses a ‘bigger trouble’ for the euro.<\/p>\n
Barclays strategists argue that if relations between the EU and the U.S. significantly deteriorate, leading to a U.S. withdrawal from NATO, the tensions over Greenland will pose a far greater issue for the euro than for the dollar.<\/p>\n
In a report, Barclays foreign exchange strategist Lefteris Farmakis and others stated, “The worst-case scenario could be a complete breakdown in relations between the U.S. and its NATO partners.”<\/p>\n
They noted that a potential U.S. exit from the alliance “should impose a negative premium on the euro.”<\/p>\n
These strategists downplayed the view that European investors’ holdings of U.S. assets serve as a significant counterbalance to American geopolitical power.<\/p>\n
They stated, ‘Although the eurozone has indeed increased its exposure to U.S. assets since the beginning of the last decade, it has also received substantial capital inflows from other parts of the world.’<\/p>\n
They added that, for instance, in a world where EU-U.S. relations have reached a breaking point, it cannot be taken for granted that Asian investors\u2019 preference for European bonds will remain unchanged.<\/p>\n
They also noted that over the past year, there has so far been no occurrence of large holders ‘dumping’ U.S. assets in response to U.S. tariffs.<\/p>\n
These strategists believe that for now, the dollar is vulnerable to the impact of Trump\u2019s latest threats, which could prompt a reversal of the long dollar positions established earlier this year.<\/p>\n
They stated that the Swiss franc, as a safe-haven currency, remains ‘the best tool to hedge against disputes within NATO,’ and added that a further rise in the VIX index could weigh on risk-sensitive currencies such as the Swedish krona, Australian dollar, Latin American currencies, and the South African rand.<\/p>\n
Citi Executive Raghavan: Rationality is Expected to Prevail Amid Trump’s New Tariff Threats<\/p>\n
Vis Raghavan, head of Citi’s global banking business, believes that investors will be able to weather the initial ‘shock and fear’ triggered by U.S. President Trump’s new tariff threats against Europe.<\/p>\n
Vis Raghavan said in an interview in Davos, ‘Hopefully, reason will prevail, leading to some compromise, and people will have to make adjustments, ultimately resulting in a positive outcome.’ He added, ‘History tells us that yes, we will get there,’ referring to tariff measures announced in April last year that were later revised and are now ‘largely priced in by the market.’<\/p>\n
Japan\u2019s Treasury Sell-Off Storm Spills Overseas; Finance Minister Pledges Action, Urges Market \u2018Calm\u2019<\/p>\n
After Japan\u2019s long-term government bond yields surged to their highest levels in decades amid intense selling and spilled over into overseas markets, Finance Minister Satsuki Katayama urged market participants to return to calm.<\/p>\n
“Since last October, our fiscal policy has been responsible and sustainable, not expansionary, and the data clearly demonstrates this,” Katayama said in an interview during the annual meeting of the World Economic Forum in Davos, Switzerland, on Tuesday.<\/p>\n
Katayama justified the responsible and sustainable nature of fiscal policy by pointing out that Japan’s reliance on bond issuance has dropped to a 30-year low, tax revenues continue to grow, and the fiscal deficit is the lowest among G7 member countries.<\/p>\n
“I hope everyone in the market can calm down,” she said.<\/p>\n","protected":false},"excerpt":{"rendered":"As geopolitical tensions have led to a concurrent decline in the U.S. stock and bond markets, with calls…\n","protected":false},"author":2,"featured_media":243657,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[138,219,111,139,69],"class_list":{"0":"post-243656","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy","8":"tag-business","9":"tag-economy","10":"tag-new-zealand","11":"tag-newzealand","12":"tag-nz"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/243656","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=243656"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/243656\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/243657"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=243656"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=243656"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=243656"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}