Danish pension fund to sell $100 million U.S. Treasuries

If Denmark was 50% bigger, they would be the size of West Virginia. If they keep acting up, we may ship them a couple busloads of those Soros Minnesota people.

I’m not really concerned about $100 million but I will be interested to see if this starts a trend and brings some bigger players following this move to do the same.

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I’m not really concerned about $100 million but I will be interested to see if this starts a trend and brings some bigger players following this move to do the same.

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This is where I am as well. Plus, what will participation look like in future auctions.

Doesn’t Europe hold something like 50% of the outstanding foreign held debt? If they sell, and stop buying, prices fixing to go up bigly.

The FT had a long piece on this yesterday. They are skeptical:

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Returning to China, there’s a reason why Beijing has never actually followed through on the long-touted threat that it might dump US Treasuries whenever it has had a major contretemps with Washington.

It’s basically the global economic equivalent of Paul Getty’s adage that if you owe the bank $100, you’ve got a problem; but if you owe the bank $100mn, then it has the problem. Or to use Cold War parlance, threatening to dump the global reserve currency is a case of mutually assured destruction.

Firstly, China’s holdings of US government and agency debt are the inevitable result of its heavily managed exchange rate. By keeping the renminbi unnaturally cheap to nurture its export industry, it has to accumulate trillions of dollars of overseas assets. But to sell these, it would need to accept a radically stronger exchange rate.

Secondly, a lot of these reserves have over the past decade primarily accumulated in China’s private sector, presumably to obscure just how big they are. Brad Setser calculated in 2023 that these “shadow reserves” at the time probably amounted to almost $3tn. If China ever made a credible threat to dump even some of its US holdings it would trash their value and do a lot of damage to its own financial system.

Europe faces the same conundrum. In fact, it is arguably far more vulnerable to blowback than China because of its much greater integration into the US-dominated financial system.

European banks and investors are stuffed with Treasuries. If they tumble in value because of a threat of a European boycott, then it would probably end up harming Europe just as much as the US, if not more so. Moreover, a large-scale repatriation of capital would send the dollar tumbling and the euro rocketing, which would alone possibly be enough to send many European countries into a recession.

Because when it comes to its international investment position, America stands alone:

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Lol, the Somalis in MN steal that every month, like we give a frick....100 million lol

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US is most stable trading partner on planet, these people are letting their emotions make decisions, which means they will take a loss.

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In 2024, I would agree.

But ever changing tarrifs, trade disruption, high inflation, domestic turbulence are all a drag on monetary policy.

If there is a broader sell-off in US treasuries, a switch by some nations to using a different reserve currency like the Euro, GBP, Yen or Yuan could be problematic in the near term 3-4 years.

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In 2024, I would agree.

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It was 2022. That’s when the Biden admin cut Russian banks off from using the SWIFT system at the behest of our European overlords. That’s what changed everything.

Honest question. What else do they buy? You can’t just sell and do nothing. You gotta have something better to buy so what would that be?