Treasury Secretary Scott Bessent is determined to ignore hiccups in the bond market over the past few days, writing it off as standard practice.
At Davos this morning, Bessent was asked how concerned he was by the notion that European investors may start selling U.S. Treasuries in response to the White House’s rhetoric over Greenland. The Treasury secretary responded: “Denmark’s investment in U.S. Treasury bonds, like Denmark itself, is irrelevant.”
“That is less than $100 million. They’ve been selling Treasuries for years, I’m not concerned at all,” he added, per CNBC.
U.S. bond yields have ticked steadily higher over the past week. Seven days ago, 10-year Treasuries stood at 4.14% and, at the time of writing, have sharply increased to 4.27%, signaling 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 now sit at 4.9% (closing in on a crucial threshold of 5% yields), up from 4.78% only a few days ago.
This shift echoes notes from banks over the past few days, which warned that foreign investors may leverage America’s debt burden against the Oval Office’s 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.
This is its “Achilles’ heel,” wrote Deutsche Bank’s Jim Reid this week, who added: “While in many ways it feels like the U.S. holds the economic cards, it doesn’t hold all the funding cards in a world that will be very disturbed by the weekend’s events.”
ING’s 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 “illustrates the deep interdependence between the U.S. and Europe but also shows that, at least theoretically, Europe also has leverage on the U.S.”
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’s bid to acquire Greenland—a territory which forms part of the Kingdom of Denmark.
The theory isn’t 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.
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.
However, the impact of a flight from U.S. assets like bonds and equities shouldn’t be misconstrued, said UBS’s Paul Donovan this morning. He noted that “Sell America” isn’t the fundamental issue, explaining: “It is not selling the stock of debt that creates a fiscal crisis, but the funding inflow. The U.K.’s 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).”
‘Sell America’
While the “sell America” notion forms only part of the wider funding picture, it has nonetheless caught the attention and ire of Bessent. Over the weekend, Deutsche Bank’s George Saravelos, global head of FX research, published a note questioning whether Europe will want to “play its part,” given heightened geopolitical tensions.
Bessent claimed the notion that Europeans will look to offload American assets stemmed from this single note, and, per Bloomberg, said Deutsche’s CEO had called him to say the bank did not stand by the report.
“We generally do not comment on potential communication between the bank and government representatives,” Deutsche Bank told Fortune this morning. “As a matter of long-standing policy, Deutsche Bank Research is independent in their work, therefore views expressed in individual research notes do not necessarily represent the view of the bank’s management.”
