Bessent calls Europe dumping US debt a 'false narrative' would 'defy logic'

US Treasury Secretary Scott Bessent on Tuesday said that Europe dumping all US debt is a highly unlikely case, a situation which will assure mutual destruction. He called it a "false narrative" and asserted that the US Treasury market is “the best-performing market in the world” and described it the the most “liquid” debt market globally. He added that Europeans investors are expected to hold on to the exposure, instead of dumping in mass.

This comes after US President Donald Trump threatened to raise a 10 per cent tariff on the European nations over Greenland. This has angered the European allies of the US, and they are seeking countermeasures.

“There's a completely false narrative there,” said Bessent, "I think everyone needs to take a deep breath. Do not listen to the media, who are hysterical."

"Europeans hold roughly $10 trillion in US assets: around $6 trillion in US equities and roughly $4 trillion in Treasuries and other bonds," said Ipek Ozkardeskaya, senior analyst at Swissquote. Selling those assets would trigger a recession. Moreover US also holds a bulk of European debts, approximately $1.2 trillion. Japan holds roughly $1.2 trillion, and China holds $682.6 billion of US debt.

"This notion that Europeans would be selling US assets came from a single analyst at Deutsche Bank,” Bessent said at WEF26 in Davos. “The CEO of Deutsche Bank called to say that Deutsche Bank does not stand by that analyst report.”

The process of weaponisation of US assets by aggressive selling off seems highly unlikely for multiple reasons. First, being that most of these stocks and treasury bonds are held by private firms, could not be controlled by the government. Moreover, such a coordinated dump would assure mutual destruction. However, such “weaponisation of capital” is becoming a risk for the markets in the long term, eventhough not right away, with evolving US postures. A strategic move would be to gradually reduce reliance on US assets, which China has done successfully since 2013, a significant drop from its peak of over $1.3 trillion to $682.6 billion. India is also strategically diversifying its foreign reserves; it reduced 21 per cent in 2025 to a total holding of $190.7 billion in October 2025.

Concerns have mounted "over the Trump administration's confrontational stance toward global counterparts, which could potentially dampen appetite for US assets", said a money manager, Patrick Munnelly, a money manager at the Tickmill group, as quoted by France 24.