Europe holds close to $8 trillion worth of US Treasuries, bonds, and equities, and Trump’s Greenland push is raising concerns of a major sell-off. The ‘Sell America’ fears are taking over the market, as it is bracing for a potential crisis. Treasuries sold off on Tuesday as yields climbed to their highest level in more than four months.

“Europe owns Greenland; it also owns a lot of Treasuries,” wrote George Saravelos, Deutsche Bank’s global head of currency research, in a note this week.

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US Greenland Plot: $8 Trillion Bonds, Treasuries, Equities At Risk

Saravelos highlighted that despite the US being a superpower, its economy depends on importing dollars. The more other countries keep the US dollar-denominated assets, the more its economy powers through. Europe holds the key to these prospects as a sell-off over the Greenland issue could harm the US the most.

Dollar exposure is a key vulnerability to the US as it depends heavily on foreign investors to finance its debt. Therefore, the US cannot leverage its economic strength to put a claim on Greenland. “For all its military and economic strength, the US has one key weakness: it relies on others to pay its bills via large external deficits,” Saravelos added.

He stressed that Europe could disrupt the US economy if Trump pushes too hard on Greenland. Europe, which is the closest ally to the US, is now facing a litmus test on geopolitical relations. “In an environment where the geoeconomic stability of the Western alliance is being disrupted existentially, it is not clear why Europeans would be as willing to play this part,” Saravelos said.

US assets are now carrying higher risks, and gold is seen as an alternative yet safer option. “The market dynamic we are seeing increasing evidence of is that US assets are now carrying a much higher political risk premium,” said Chris Weston, head of research at Pepperstone. In conclusion, the US has limited bargaining power on Greenland as $8 trillion worth of assets come into the picture.