Sen. Elizabeth Warren (D-Mass.) slammed Treasury Secretary Scott Bessent for downplaying the risks of waning global demand for U.S. Treasuries.
It’s A ‘Huge Deal’
On Wednesday, in a post on X, Warren criticized Bessent’s comments during the World Economic Forum at Davos, when he said that he was “not concerned at all” about investors selling American Treasuries.
“It’s a huge deal,” Warren said, warning that because Treasuries are seen as the benchmark for the financial system, weaker demand could translate into higher interest rates for consumers, including “on car loans and mortgages.”
“Why is he spouting nonsense?” she asked, while accusing Bessent of making economically irrational claims driven by political loyalty to President Donald Trump, whom she referred to as “a wannabe dictator.”
Bessent was asked about a Danish pension fund’s recent decision to dump all of its U.S. Treasury holdings, to which he responded, saying, “That is less than $100 million. They’ve been selling Treasuries for years, I’m not concerned at all,” according to a report by CNBC.
“Denmark’s investment in U.S. Treasury bonds, like Denmark itself, is irrelevant,” Bessent said, while adding that the country had “record foreign investment” in its Treasuries.
Danish Pension Fund To Dump US Treasuries
On Wednesday, AkademikerPension Chief Investment Officer Anders Schelde told Benzinga the fund’s decision to divest from U.S. Treasuries was driven by what he described as “poor U.S. government finances.”
He added that, going forward, the fund plans to rely on alternatives such as “cash USD, short-dated agency debt and the like.”
Falling US Treasury Demand A Concern
Recently, Geng Ngarmboonanant, managing director at JPMorgan Chase & Co., warned about the changing profile of U.S. government debt holders, with foreign governments, once the largest buyers of U.S. Treasuries, now holding just 15% of the market, a significant drop from 40% in the 2010s.
According to Ngarmboonanant, this gap is being filled by private investors, which he said has contributed to higher and more volatile interest rates.
Last year, for the first time in nearly three decades, foreign central banks held more gold than U.S. Treasuries, marking a significant shift in the global financial landscape.
The iShares Treasury Bond ETF (BATS: GOVT), which invests in and tracks U.S. Treasury bonds, was up 0.22% on Wednesday, closing at $23.00. The fund has an unfavorable price trend in the short, medium and long terms according to Benzinga’s Edge Stock Rankings.
Photo Courtesy: Bryan J. Scrafford on Shutterstock.com
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