Something important just happened in global markets, and it’s flying under the radar.
Several European pension funds have reduced their exposure to US Treasuries, with Sweden’s AP7 and a Danish pension fund among the most notable. In total, close to $9 billion worth of US government bonds were sold — not because yields were unattractive, but because political risk is now being priced in.
That alone is a big shift.
For decades, US Treasuries were treated by European institutions as near-sacred: liquid, stable, and politically neutral. This move breaks that long-standing assumption. The funds openly cited concerns around rule of law, policy unpredictability, and long-term political stability in the US, especially in light of recent geopolitical tensions and domestic polarization.
What makes this more interesting is the timing. The sales came amid rising friction between the US and Europe — from defense spending disputes and NATO pressure to broader disagreements over foreign policy direction. While this isn’t an outright rejection of the dollar system, it does signal discomfort with the idea that financial dominance can be paired with political leverage.
Until now, de-dollarization was mostly associated with BRICS nations like China and Russia, often framed as ideological or strategic opposition to the US. Europe’s actions are different — quieter, institutional, and arguably more telling. The EU and its funds still hold massive amounts of US debt (over $1.5 trillion), but the direction matters more than the size of a single sale.
This doesn’t mean the dollar is collapsing tomorrow. The USD remains the world’s primary reserve currency, and US Treasuries are still among the deepest and most liquid markets on earth. But what is changing is perception. When politics start influencing assets once considered “risk-free,” trust erodes — slowly, then suddenly.
Markets don’t just react to economics anymore. They react to credibility.
And that shift may end up being far more significant than any single bond sale. 💥