“Denmark’s investment in U.S. debt is as irrelevant as Denmark itself,” U.S. Treasury Secretary Scott Bessent told reporters at Davos on Wednesday.
The “Sell America” trade kicked into high gear on Tuesday after President Donald Trump and European leaders escalated tensions over Greenland. U.S. stock and bond prices fell and yields soared.
This followed President Trump’s threat to impose 10% tariffs on eight European countries as part of his push to take over Greenland, which spooked markets. President Trump said the levy would go into effect on February 1 and increase to 25% thereafter.
However, European holdings of US debt have been suggested as a potential countermeasure.
Danish pension operator Academia Carpension announced on Tuesday that it would sell $100 million in U.S. bonds. Anders Schelde, investment director at Academic Carpension, said the decision was driven by “poor (US) government finances.”
“Denmark’s investment in U.S. debt is as irrelevant as Denmark itself,” Bessent said at a World Economic Forum press conference, when asked how concerned he was about European investors pulling out of government bonds.
“It’s less than $100 million. They’ve been selling Treasuries for years, but I’m not worried at all.”
Bessent added that the United States is making “record overseas investments” in the Treasury Department.
He suggested that the decline in Japanese government bonds following the announcement of snap elections in the island nation was “spreading over to other markets.”
“The idea that Europeans would sell American assets came from one analyst at Deutsche Bank and was then amplified by the fake news media,” Bessent said.
“The United States has one significant weakness: its dependence on other countries to pay its bills through large external deficits,” the Jan. 18 memo said. At the time, European countries held $8 trillion in U.S. bonds and stocks.
“It is unclear why European countries are playing this role so aggressively in an environment where the geoeconomic stability of the Western alliance is being existentially destroyed,” said George Saravelos, global head of currency research at Deutsche Bank.
He added: “Denmark pension funds were among the first to repatriate funds and reduce dollar exposure this time last year. Across Europe, US dollar exposure remains very high and developments over the past few days could prompt further dollar rebalancing.”
Bessent told reporters Wednesday that Deutsche Bank’s CEO called him and said that Deutsche Bank “does not support the analyst report.”
A Deutsche Bank spokesperson told CNBC that the company typically does not comment on “potential communications between banks and government representatives.”
“As a long-standing policy, Deutsche Bank Research is operationally independent and the views expressed in individual research notes do not necessarily represent the views of the bank’s management,” the spokesperson said.
Europe should ‘sit and wait’ for Trump
The United States considers Greenland a national security concern, as a warming Arctic and the emergence of new trade routes open the floor for a potential power play between the United States, Russia, and China. The Trump administration has said it wants to avoid such conflicts.
“We’re asking our allies to understand that Greenland needs to become part of the United States,” Bessent told reporters.
But Greenlanders are “confused” by President Trump’s “catastrophic” plan to annex the Danish territory, the country’s Commerce Minister Nathan Elsen told CNBC on Tuesday.
“(We) have always considered ourselves an ally of the United States and have sought to meet the needs of the United States for many years, and we are happy to do so,” Nathanielsen said in a video call.
“It’s really difficult for us to suddenly find ourselves in the middle of a storm of people trying to take possession of us, like products and property. Not to mention the threat of military action and actual occupation of our country.”
Island politicians say Greenland is open for business but not for sale.
Bessent added that the United States purchased the U.S. Virgin Islands from Denmark during World War I because it “understood” the importance of the islands.
“President Trump has made it clear that we will not entrust our national security or the security of the hemisphere to another country,” Bessent said. “Our partner the UK has failed us and wants to hand over the Diego Garcia base that we have shared for many years to Mauritius. So President Trump is serious here.”
“As I said after Emancipation Day last year, I would say to everyone, ‘Take a deep breath and don’t have the knee-jerk anger and bitterness that we saw. Why don’t they sit back and wait for President Trump to come here and listen to his arguments, because I think they’ll be persuaded.”
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—CNBC’s Sam Meredith contributed to this report.
