European Asset Managers Signal Potential Shift Away from US Markets
New York, Sunday, 25 January 2026.
A looming “buyers’ strike” threatens Wall Street as European investors, holding $10.4 trillion in US equities, reassess risks. Danish funds have already begun divesting amid rising political volatility.
The Catalyst: Politics Meets Yield Spikes
The immediate trigger for this strategic reassessment appears to be the intersection of fiscal sustainability concerns and aggressive geopolitical posturing. On January 22, 2026, the Danish pension fund AkademikerPension confirmed plans to liquidate approximately $100 million of its U.S. sovereign bond portfolio by the end of the month [1]. While this figure represents a fraction of the market, the rationale offered by Chief Investment Officer Anders Schelde—that the U.S. is fundamentally “not a good credit” and its government finances are unsustainable—resonates with a growing cohort of wary investors [1]. This sentiment materialized in the bond markets as the yield on the 10-year U.S. Treasury approached 4.3% on January 22, reaching its highest level since August 2025, while the 30-year yield neared the psychological threshold of 5% [1].
Weaponization of Capital Flows
The volatility is further exacerbated by the Trump administration’s recent diplomatic friction regarding Greenland, which prompted fears of retaliatory tariffs [2]. Although U.S. officials initiated a diplomatic climbdown at the World Economic Forum in Davos to avert immediate trade penalties on Europe [3], the incident has highlighted the fragility of cross-border capital stability. Deutsche Bank strategists have warned that capital flows are increasingly being “weaponized” as political leverage, creating a scenario where European holdings of U.S. assets could be drawn into trade disputes [4]. This introduces a layer of systemic risk for the U.S. economy, which relies heavily on the approximately €300 billion in European savings that flow annually across the Atlantic to fund budget deficits and industrial expansion [3].
Performance Disparities Drive Diversification
Beyond political risk, comparative market performance is compelling asset managers to look elsewhere. In 2025, the U.S. dollar depreciated 9.1% against a basket of major currencies, eroding the real returns for foreign holders of American assets [2]. Furthermore, while the S&P 500 delivered a solid return of 16.39% in 2025, it was significantly outperformed by other global indices; South Korea’s Kospi surged 80.37%, and Canada’s S&P/TSX Composite rose 28.28% [2]. Consequently, major firms like Pimco have acknowledged plans to diversify investments and reduce exposure to the U.S., driven by a combination of policy concerns and the search for superior yield [1].
The Reality of Entanglement
Despite the hawkish rhetoric, a total decoupling remains logistically daunting for European institutions. Europe holds $3.6 trillion in U.S. Treasury bonds, representing just under 40% of all U.S. public debt in foreign hands [1], alongside approximately $10.4 trillion in U.S. equities [2]. Recognizing this deep integration, UBS Group AG CEO Sergio Ermotti stated on January 20, 2026, that diversifying away from America is effectively “impossible” [3]. Some analysts argue the current “sell America” narrative is merely noise; following the de-escalation of the Greenland dispute at Davos, the S&P 500 rebounded more than 1%, suggesting that many investors are adopting a “wait-and-see” attitude rather than fleeing the market entirely [5]. However, the willingness of pension funds to publicly announce divestments signals that the era of automatic capital allocation to Wall Street may be drawing to a close.