"Selling America" trend resurgence Analyst: "Hedging America" is more realistic

The United States has the world's deepest and most liquid financial market, and the US dollar has long been the "currency king", with US Treasury bonds considered as a top safe-haven asset. However, as uncertainty in Trump administration policies rises, the narrative of "selling America" is quietly fermenting among global investors. This narrative can be traced back to April 2025. At that time, US President Trump imposed tariffs on dozens of countries under the name of "Liberation Day", disrupting the global trade system. By early 2026, Trump's move to "control Greenland" once again outraged allies, especially in Europe, sparking strong backlash and reigniting discussions of "selling America". For a long time, foreign funds have played a key role in supporting the overvalued US stock market and filling fiscal and trade deficits. Although there are currently no signs that global capital is completely "divesting from America", even a shift in sentiment, however mild, may have a profound impact on the US dollar, US Treasury bonds, and the US economy. Market analysts point out that the reason the US has been able to withstand massive fiscal and trade deficits for so long is due to what is known as "exorbitant privilege", whereby global investors have almost unbreakable trust in the US dollar and US Treasuries, resulting in a continuous inflow of foreign capital into US assets. But if this "spell" were to be broken and US assets are no longer seen as the safest choice, the consequences could be severe. Selling off US assets by foreign investors could weaken the US dollar and shrink the financing pool available to the US government and businesses. If import costs rise, borrowing rates increase, and the US economy falls into a vicious cycle, fiscal deficits could become unsustainable and even trigger recession risks. The market briefly experienced this scenario after the shock of "Liberation Day" tariffs, with simultaneous selling pressure on the stock market, bond market, and US dollar, forcing Trump to retract some of his trade threats. Although the turmoil did not last long and the economy did not suffer major damage, since Trump returned to the White House, the US dollar has fallen by about 10%, approaching its weakest level since 2022, indicating that investors are gradually reducing their exposure to the US dollar. The core of the "selling America" narrative is the rising concern about the risks of US dollar assets. For decades, foreign investors have continued to flock to the US based on its deep capital markets, rule of law, free trade commitments, stable monetary system, independent monetary policy, and high sovereign credit ratings. However, these advantages are showing signs of erosion. In May 2025, Moody's stripped the US of its last AAA credit rating, citing that the long-term fiscal deficit outlook no longer met AAA standards. At that time, the yield on US 30-year Treasury bonds briefly exceeded 5%. Meanwhile, Trump's tariff policy has raised costs for multinational companies and increased uncertainty, lowering the attractiveness of US investments. What is even more concerning to the market is Trump's frequent pressure on the Federal Reserve to cut interest rates, causing anxiety about the central bank's independence. Investors fear that unnecessary rate cuts leading to resurging inflation could further erode the purchasing power of the US dollar. In terms of practical actions, the Danish pension fund, AkademikerPension, became a typical case of "selling America". After Trump threatened to take Greenland, the fund announced that it would sell about $1 billion of US Treasury holdings, stating that the US was now seen as a credit risk. Although this is just a drop in the ocean compared to the $30 trillion US Treasury market, its symbolic significance should not be ignored. Additionally, the Dutch pension fund, PME, decided to reduce its allocation to US assets for the same reasons of concern about the direction of Trump administration policies. At the same time, the continuous decline of the US dollar and the strong rise in metal prices since 2025 have been interpreted by some as investors seeking alternatives to US stocks and bonds. Japan, due to rising interest rates, has been frequently mentioned as a potential alternative market, while PME stated that it would focus more on the European technology sector in the future. However, some analysts suggest that the more realistic scenario may not be "selling America", but rather "hedging America". Investors may still hold US stocks and bonds, but hedge against the further depreciation risk of the US dollar through foreign exchange forwards or derivative tools. This operation would also put downward pressure on the US dollar, even if capital has not truly left the US securities market. According to data from the US Treasury Department, as of June 2024, foreign investors held about 21% of the market value of US securities, including about one-third of US Treasury bonds, 27% of corporate bonds, and 18% of US stocks. In terms of US Treasury bonds, Japan remains the largest foreign holder with a size of about $1.2 trillion, followed by the UK and China. During the height of the Greenland dispute, Deutsche Bank proposed that Europe could potentially "weaponize capital" as a countermeasure, causing market tension, but US Treasury Secretary Benton subsequently clarified the situation. Experts generally believe that European governments are unlikely to actually use these holdings as economic conflict tools, as most US stock and bond assets are held by private institutions rather than national governments. Despite the rising risks, "selling America" is still not an easy task. Over the past decade, US corporate profit growth has far exceeded that of other regions, with tech giants having virtually no true global competitors, and their digital ecosystem has become an unavoidable platform for global economic activities. The wave of artificial intelligence is more likely to attract more economic value to Silicon Valley, consolidating US technological dominance. In the bond market, although countries like Australia, New Zealand, and the UK offer similar yields, their market sizes are much smaller than the US. The euro as an alternative to the US dollar is also constrained by structural issues and is unlikely to challenge the dollar's status in the near term. As Alae Laghrich, the chairman of PME, said, the US "remains an economic force that cannot be ignored, where positive returns can still be obtained".