Is the “Safe Haven” status of US assets cracking?
A growing cohort of Northern European pension funds and investment chiefs are actively reassessing their exposure to the US market. According to Reuters, the combination of fiscal concerns (rising debt) and geopolitical unpredictability is driving a quiet but significant rotation away from US Treasuries and the Dollar.
📉 THE EXODUS:
- The Movers: Sweden’s Alecta and Denmark’s AkademikerPension recently confirmed they have sold or are selling their US Treasury holdings.
- The Scale: Russell Investments (advising $1.6T) reports that ~50% of its Northern European clients are now discussing “whether it is time to tilt away from U.S. assets.”
- The Rationale: It’s not political retaliation (“weaponization of capital”), but financial prudence. CIOs cite the “reduced predictability” of US policy and the rising risk premium required to hold US sovereign debt.
🇺🇸 MACRO IMPACT: The sentiment shift is already showing up in market signals:
- The Dollar: Fell 10% against major currencies last year.
- Yields: 30-year US Treasury yields are hovering near 4.9%, levels reminiscent of the Global Financial Crisis.
- Dutch Signals: ABP, Europe’s largest pension fund, also saw a steep drop in US Treasury values, likely driven by reduced holdings.
🗣️ THE QUOTE: “There is certainly no weaponisation of capital… All of this turmoil is raising some questions about how exposed you should be to the U.S… that is what our members are professionally assessing.” — Tom Vile Jensen, Insurance and Pensions Denmark.
💡 ANALYST TAKEAWAY: When Nordic pension funds—historically the world’s most conservative allocators—start treating US Treasuries as a “high risk” asset class, the market should pay attention. This suggests that the US fiscal deficit and political volatility are finally manifesting as a tangible cost of capital. If this “reassessment” spreads from the Nordics to broader European and Asian institutional pools, the structural bid for US debt could face a serious test.
👇 Global CIOs: Is the “US Risk Premium” now high enough to justify underweighting the world’s largest market, or is there simply no alternative?