Treasury Secretary Scott Bessent is determined to ignore hiccups in the bond market over the past few days, writing it off as standard practice. <\/p>\n
At Davos this morning, Bessent was asked how concerned he was by the notion that European investors may start selling U.S. Treasuries<\/a> in response to the White House\u2019s rhetoric over Greenland. The Treasury Secretary responded: \u201cDenmark\u2019s investment in U.S. Treasury bonds, like Denmark itself, is irrelevant.\u201d<\/p>\n \u201cThat is less than $100 million. They\u2019ve been selling Treasuries for years, I\u2019m not concerned at all,\u201d he added, per CNBC<\/a>.<\/p>\n U.S. bond yields have ticked steadily higher over the past week. Seven days ago, 10-year Treasuries <\/a>stood at 4.14% and, at the time of writing, have sharply increased to 4.27%, signalling buyers are exiting the market, pushing up yields as a result. The increase can be seen even more acutely at the long end of the curve: 30-year Treasuries<\/a> now sit at 4.9% (closing in on a crucial threshold of 5% yields) up from 4.78% only a few days ago. <\/p>\n This shift echoes notes from banks over the past few days, which warned that foreign investors may leverage America\u2019s debt burden against the Oval Office\u2019s plans to buy Greenland. While the biggest buyer of U.S. debt is its own central bank, it is also reliant on foreign governments and private investors to fund its spending. <\/p>\n This is its \u2018Achilles Heel\u2019<\/a> wrote Deutshce Bank\u2019s Jim Reid this week, who added: \u201cWhile in many ways it feels like the U.S. holds the economic cards, it doesn\u2019t hold all the funding cards in a world that will be very disturbed by the weekend\u2019s events.\u201d<\/p>\n ING\u2019s Carsten Brzeski, global head of macro, and Bert Colijn, chief economist for the Netherlands made the same point, highlighting the $8 trillion Europe holds in U.S. debt \u201cillustrates the deep interdependence between the U.S. and Europe but also shows that, at least theoretically, Europe also has leverage on the U.S.\u201d<\/p>\n That leverage may be used to combat threats made by President Trump that a handful of European nations would be facing increased tariffs if they blocked America\u2019s bid to acquire Greenland\u2014a territory which forms part of the Kingdom of Denmark. <\/p>\n The theory isn\u2019t without foundation. April 2, 2025, when President Trump announced his Liberation Day tariffs on every country on the planet, kicked off a bumpy time in bond markets which saw 30-year yields spiking from 4.39% to 4.87% within a matter of days.<\/p>\n As such, a week after the Rose Garden address, Trump announced he would be delaying the tariffs by 90 days: The bond selloff slowed pace within 48 hours, and then began to decline. <\/p>\n However, the impact of a flight from U.S. assets like bonds and equities shouldn\u2019t be misconstrued, noted UBS\u2019s Paul Donovan this morning. He noted that \u2018Sell America\u2019 isn\u2019t the fundamental issue, explaining: \u201cIt is not selling the stock of debt that creates a fiscal crisis, but the funding inflow. The UK\u2019s Truss debacle and the Greek financial crisis were essentially funding problems. Reduced inflows rather than mass selling are the real risk. This distinction is relevant for the U.S. (dependent on foreign funding flows).\u201d \u00a0<\/p>\n \u2018Sell America\u2019<\/p>\n While the \u2018sell America\u2019 notion only forms part of the wider funding picture, it has nontheless caught the attention and ire of Bessent. Over the weekend, Deutsche Bank\u2019s George Saravelos, global head of FX research, published a note questioning whether Europe<\/a> will want to \u201cplay its part\u201d given heightened geopolitcal tensions. <\/p>\n