Global Retreat From US Treasuries Deepens: What It Signals for Risk Assets
Foreign international locations are retreating from US debt markets. Denmark’s holdings of US Treasuries are slipping to report lows, whereas India and China proceed to cut back their publicity to US authorities debt.
This sustained retreat by main international holders factors to a broader erosion of confidence in US fiscal self-discipline and long-term debt sustainability. This development has main implications for world capital prices, liquidity circumstances, and threat asset valuations.
Foreign Demand for US Debt Fractures as Some Exit and Others Double Down
In a contemporary publish on X (previously Twitter), The Kobeissi Letter, highlighted that over the previous 12 months, Denmark decreased its US Treasury holdings by $4 billion, a 30% decline.
“Denmark’s US Treasury holdings are at report lows: The worth of US Treasuries held by Denmark is all the way down to ~$9 billion, the bottom in 14 years…Denmark is quietly exiting US debt market,” the post learn.
Since peaking in 2016, Danish holdings have dropped by greater than half. The nation now accounts for lower than 1% of Europe’s total holdings of US authorities securities, valued at $3.6 trillion.
Furthermore, Danish pension fund AkademikerPension has acknowledged it’s going to totally divest from US Treasuries value round $100 million by the top of the month. The fund’s Investment Director, Anders Schelde, noted that the “determination is rooted within the poor US authorities funds.”
Nonetheless, whereas chatting with reporters on the World Economic Forum in Davos, Switzerland. US Treasury Secretary Scott Bessent on Wednesday dismissed the issues.
“Denmark’s funding in US Treasury bonds, like Denmark itself, is irrelevant,” he stated. “That is lower than $100 million. They’ve been promoting Treasurys for years, I’m not involved in any respect.”
While Denmark’s move may not concern Bessent by itself, it’s removed from an remoted case. According to knowledge launched by the US Department of the Treasury, China’s US Treasury holdings have dropped to a 17-year low.
China’s holdings fell to $682.6 billion in November, down from $688.7 billion in October, marking the bottom degree since 2008.
“And in the event that they proceed like this, they’ll be beneath 500bn quickly, beneath Belgium and Luxembourg haha. China is insulating itself from the incoming crash within the West,” a market watcher wrote.
India has adopted an identical path, with its US Treasury holdings dropping to round $190 billion by the top of October 2025. Taken collectively, these actions level to a basic reassessment of US credit risk among major international holders.
The scale and persistence of those reductions counsel greater than routine portfolio rebalancing. Instead, they replicate rising concern over America’s fiscal sustainability and the danger of policy-driven deterioration in credit score high quality.
There is, nonetheless, a counterbalance. Japan and the UK have increased their holdings. Japan’s publicity rose by $2.6 billion to $1.2 trillion. In addition, the UK expanded its holdings by $10.6 billion to $888.5 billion.
Liquidity Cascade and Implications for Crypto
Nevertheless, an analyst has warned of a looming “large storm” as international locations speed up their sell-off of US Treasuries. The publish defined that treasury liquidations create ripple results throughout world markets.
US Treasuries play a central function within the world monetary system. When giant volumes of Treasuries are bought, bond costs are inclined to fall, and yields rise, growing borrowing prices throughout the financial system.
Higher yields can result in tighter monetary circumstances, as costlier funding discourages risk-taking and reduces accessible liquidity. Analysts observe that in such environments, belongings that rely closely on plentiful liquidity, together with equities and cryptocurrencies, might come underneath stress.
Furthermore, US Treasuries are the primary collateral for banks, funds, and market makers. Falling Treasury values impair collateral, pushing monetary establishments to decrease threat publicity. This, in flip, triggers promoting stress throughout many asset courses.
“Stocks and crypto don’t stay in a vacuum. They are constructed on low-cost funding + straightforward liquidity. So when bonds get hit, it isn’t ‘boring bond stuff.’ It is collateral getting weaker,” Wimar stated.
The analyst outlined a sequence of how markets might reply. Bonds sometimes transfer first. Equity markets are inclined to react later, reflecting adjustments in funding circumstances and investor threat urge for food.
Cryptocurrencies, that are extremely delicate to liquidity and leverage, often experience the sharpest worth swings as threat aversion units in. This chain response signifies that disruptions within the Treasury market can threaten the complete risk asset space.
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