European funds withdraw assets from U.S. Treasury amid budget risks

Treasury — a system of managing government finances and issuing government bonds. The American Treasury is one of the most significant in the global financial system, but its stability has begun to raise serious concerns among major institutional investors. In particular, European pension funds are actively reevaluating their portfolios, signaling increasing risks of American fiscal policy.

Warning Signs: Mass Outflow from American Debt Securities

Swedish pension fund Alecta has initiated a significant reduction of its positions in American debt obligations, divesting $7.7–8.8 billion in bonds since the beginning of 2025. According to the analytical platform NS3.AI, this decision was made in response to growing uncertainty in fiscal policy and the rapid increase in the federal debt of the United States. A similar stance was taken by Danish organization AkademikerPension, which announced its intention to fully liquidate its $100 million portfolio of American government bonds.

Why European Investors Are Overestimating Treasury Risks

These large-scale sell-offs reflect a fundamental shift in European investors’ assessment of the long-term reliability of the American Treasury as an investment asset. Growing national debt, rapid expansion of the budget deficit, and political instability create conditions where traditionally conservative pension funds are actively diversifying their portfolios away from American securities.

Geopolitical Factors Amplify Concerns

The sell-offs are occurring amid escalating international tensions, adding an extra layer of uncertainty to an already unpredictable financial situation. This creates a vicious circle: reduced demand from large institutional players for American debt could lead to further weakening of the dollar and increased pressure on Treasury bond rates.

Signal for Global Markets

Mass capital outflows from the American Treasury by European pension funds are not just an isolated event but an indicator of a broader reassessment by investors of global asset allocation. If this trend continues, it could significantly impact the cost of American government debt and force Washington to reconsider its long-term financial strategy.