Amid a joint decline in US stock and bond markets driven by geopolitical tensions and resurgent calls to "sell America," the CEO of UBS has issued a warning that offloading US assets constitutes a "rather dangerous" gamble. While the Danish pension fund AkademikerPension has announced it will sell US Treasuries, US Treasury Secretary Bassett has dismissed speculation about potential European retaliation through bond sales as a "false narrative." Meanwhile, the President of Finland has predicted a "de-escalation" of the Greenland crisis before the weekend.
UBS Group AG CEO Sergio Ermotti stated that investors selling US assets and betting against the dollar are making a "rather dangerous bet." "It's impossible to completely shift allocations away from the US," Ermotti said in an interview on Tuesday during the World Economic Forum in Davos, Switzerland. "The US is the most powerful economy in the world." Ermotti added that the US market remains a key focus for UBS due to the continuous creation of wealth and innovation within its economy.
The Danish pension fund AkademikerPension plans to sell its US Treasury holdings by the end of the month, citing concerns that policies under US President Donald Trump have introduced significant credit risks that cannot be ignored. "The US essentially does not have a good credit profile; the US government's finances are unsustainable in the long term," the fund's Chief Investment Officer, Anders Schelde, said on Tuesday. Schelde revealed that the fund, which manages approximately $25 billion in savings for teachers and academics, held about $100 million in US Treasuries as of the end of 2025. He emphasized that risk and liquidity management were the sole reasons for still holding US bonds, adding, "we have decided that we can find alternatives."
Against the backdrop of a widening transatlantic rift over US intentions regarding Greenland, US Treasury Secretary Scott Bassett called for calm, urged allies to adhere to trade agreements, and refuted suggestions that Europe might retaliate forcefully by selling US Treasuries. "I am confident that leaders will not escalate the situation and that it will ultimately be resolved in a very desirable manner," Bassett said at a press conference on Tuesday during the World Economic Forum in Davos. When asked about reports of potential European Treasury sales, Bassett dismissed the speculation as a "false narrative." "This is completely illogical, and I strongly disagree with it," he told reporters.
Finnish President Alexander Stubb predicted that the crisis surrounding Greenland could "de-escalate" before the weekend. "I've had the latest communication on this topic in the last two or three hours—that's the speed at which things change in the new environment of foreign policy today—which gives me a glimmer of hope that we will find a solution," Stubb said in an interview in Davos, without providing further details.
Barclays strategists argue that if EU-US relations deteriorate severely, potentially leading to a US withdrawal from NATO, the Greenland tensions would pose a far greater problem for the euro than for the US dollar. "The worst-case scenario could be a complete rupture in the relationship between the US and its NATO partners," said Barclays FX strategists, including Lefteris Farmakis, in a report. They stated that a potential US exit from the alliance "should impart a negative premium on the euro." These strategists downplayed the view that European investors' holdings of US assets serve as a significant check on US geopolitical power. "While it is true that the euro area has increased its exposure to US assets since the early part of the last decade, it has also received substantial capital inflows from the rest of the world," they said. They added that, for instance, in a world where EU-US relations have reached a breaking point, one cannot assume that Asian investors' preference for European bonds would remain unchanged. They also noted that over the past year, significant "dumping" of US assets by large holders in response to US tariffs has not materialized thus far. The strategists believe that, for now, the dollar is vulnerable to shocks from Trump's latest threats, which could trigger a reversal of the bullish dollar positions built up since the start of the year. They identified the safe-haven Swiss franc as the "best tool to hedge intra-NATO strife," adding that a further rise in the VIX index could hit more risk-sensitive currencies such as the Swedish krona, Australian dollar, Latin American currencies, and the South African rand.
Vis Raghavan, Global Head of Banking at Citigroup, believes investors will weather the initial "shock and fear" sparked by President Trump's new tariff threats against Europe. "Hopefully, reason will prevail, some sort of compromise will be reached, people will have to adjust, and it will end well," Raghavan said in an interview in Davos. "History tells us that, yes, we will get there," he added, citing the tariffs announced last April that were later modified and are now "largely priced in by the market."
After a fierce sell-off pushed yields on long-term Japanese Government Bonds (JGBs) to multi-decade highs, with the turmoil spilling overseas, Japan's Finance Minister, Katsuya Satsuki, urgently called for market participants to regain their composure. "Since last October, our fiscal policy has been responsible and sustainable, not expansionary, and the data clearly shows that," Satsuki said in an interview on Tuesday during the annual World Economic Forum meeting in Davos, Switzerland. Satsuki pointed to Japan's reliance on bond issuance falling to a 30-year low, sustained growth in tax revenue, and the lowest fiscal deficit among G7 nations as evidence of responsible and sustainable fiscal policy. "I want everyone in the market to calm down," she said.
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